Revolt as Shoprite shareholders slam CEO bonus award

An astonishing 46% of ordinary shareholders in Shoprite Holdings voted against the group’s proposal to make a special award – the CEO Executive Share Plan (CEO-ESP) – to CEO Pieter Engelbrecht.

The resolution required 50% plus one vote to pass, but actually passed with 70.91% in favour (not just the 53.81% of ordinary shares) thanks to the higher voting deferred shares owned by Christo Wiese.

Read: As Shoprite CEO pay tops R117m, group wants to lock him in for six years Shoprite CEO pay plan meets resistance from proxy advisors

The award will see Engelbrecht issued with 525 000 performance shares which, at the current share price, would be valued at over R176 million.

Shoprite says the award “was designed to incentivise the successful delivery of a unique combination of strategic, transformational and succession-related outcomes and to secure his continued employment for a strategic six-year period”.

“The award addresses the delivery of a specific, time-bound set of strategic key initiatives that extend beyond the scope of the Group’s normal CEO incentive arrangements.

“The award is designed to align CEO reward directly with the successful delivery of future shareholder value.”

In its annual report, remuneration committee (Remco) chair Peter Cooper, wrote that “the CEO-ESP is designed to sustain future earnings growth, successful delivery of strategic technology initiatives, strengthening organisational capability, developing future leadership talent and manage an effective and orderly succession process”.

Shoprite stands unique among supermarket retailers, with all three of the others either having replaced their CEOs or announced replacements:

Shareholders told to say ‘no’

At the start of last week, the world’s two largest proxy advisor services, Institutional Share Services (ISS) and Glass Lewis & Co, told shareholders to reject the proposal at the AGM.

According to Bloomberg, ISS said that Shoprite hadn’t provided a sufficiently compelling rationale for adding another substantial incentive.

Read: Incentive payouts soar for top South African bosses

It also recommended that shareholders vote against the retailer’s implementation report due to the fact that the Remco had applied a special “sales growth modifier” which triggered the full payout of the short-term incentive, even though performance was below the threshold.

The group in its justification of the special award, says that “the current CEO, Pieter Engelbrecht, has dedicated 29 years of continuous service to the company, including leading the group through a period of exceptional transformation, growth and shareholder value creation”.

Read: Shoprite teams up with Investec to take on SA’s banks

“During this time, the company has strengthened its position as South Africa’s leading food retailer, built industry-leading digital capabilities, and delivered sustained market share gains in an increasingly competitive retail environment.

“Significant shareholder value has been created during the CEO’s tenure.”

The deferred shares were issued to Wiese, the founder of the group, in 2000 at a nominal value of 0.1c each.

They give Wiese voting rights of about 32.2% of the total, despite him only owning a 10.68% stake in the group.

However, these automatically expire if his shareholding drops below 10%.

The group attempted to buy back the deferred shares from Wiese for R3.3 billion in 2019 after receiving formal pushback from more than 15% of shareholders. The transaction would’ve required approval from 75% of shareholders.

Few other resolutions at the 2026 AGM received much pushback, save for the vote on the group’s remuneration report (previously referred to as a vote on implementation), which had 22.83% of votes against it.

Under amendments to the Companies Act, these are now binding votes but only require votes in favour of more than 50%.

Previously, votes in favour of less than 75% required listed companies to formally engage with shareholders, but there were no particular consequences for failing to meet the threshold.

The super-shares would trouble me in any company.

They attach no economic value (like an ordinary share does to dividends or liquidation proceeds). How can they then be worth tens of billions?

The clearest way to demonstrate what I mean : super shares are NOT considered in earnings per share or market capitalization in the normal course of events – they are theoretically economically worthless.

I get why founders create and use them (google’s founders also have them) but that exact same reason is why super voting shares should in the MOI have one very important limitation : that they are not transferable.

Huang disclosed the romantic relationship in a memo to employees on Sunday.