Major Investors Challenge Bidvest's Olympic Spending
South African conglomerate Bidvest Group Ltd. is confronting significant shareholder resistance over its controversial proposal to fund a Paris Olympics trip for its chairman and two non-executive directors. The company, which generates approximately 127 billion rand ($7.4 billion) in annual revenue from diverse operations including port management and cleaning services, now faces a crucial vote that could determine the fate of this expenditure.
Proxy Advisors Take Opposite Sides
Institutional Shareholder Services Inc. (ISS), the world's largest proxy advisory firm, has strongly recommended that stockholders reject the proposal to reimburse Chairman Bonang Mohale, Lead Director Renosi Mokate, and non-executive director Sindi Mabaso-Koyana for their Olympic journey. The advisory firm cited the "relatively excessive amount" of 1 million rand ($58,000) as primary justification for their opposition.
However, the situation reveals divided opinions among major advisory firms. While ISS advocates rejection, its competitor Glass Lewis & Co. has not recommended similar action against the resolution. This division reflects the complex nature of corporate spending decisions and their governance implications.
Global Investors Unite Against Proposal
The opposition extends beyond advisory recommendations to include several prominent institutional investors. Calvert Investment Management Inc., a Bidvest shareholder owned by Morgan Stanley, has publicly declared it will follow ISS's guidance and vote against the reimbursement.
This stance is shared by multiple major pension funds and investment managers worldwide, including:
- The California Public Employees' Retirement System (CalPERS)
- British Columbia Investment Management Corporation
- New York City Employees' Retirement System
- State Board of Administration of Florida Retirement System
The Florida SBA explicitly stated the payments are "excessive and could be considered to potentially compromise independence," highlighting governance concerns beyond mere financial considerations.
Bidvest's Defense and Supporters
Bidvest has defended its position by emphasizing the company's role as a sponsor of the South African Sports Federation and Olympic Committee. The conglomerate described the Paris Olympic Games as "a proud and significant event for South Africa and naturally for Bidvest, as the headline sponsor of TEAM SA."
According to company statements, Bidvest extended invitations to all its non-executive directors to join the executive team and 80 junior employees on the Paris trip "in recognition of our contribution towards excellence." Mohale, Mokate, and Mabaso-Koyana were the only directors who made themselves available for the journey.
Despite significant opposition, the proposal has found support from notable investors. Norges Bank Investment Management and the California State Teachers' Retirement System have indicated they will approve the resolution, demonstrating that perspectives on appropriate corporate spending vary among institutional stakeholders.
Broader Governance Concerns Emerge
The controversy has sparked wider discussions about Bidvest's board composition and governance practices. Several money managers have questioned the independence of the Bidvest board, suggesting it contains too many executives and may lack sufficient independent oversight.
Bidvest has engaged in damage control through shareholder communications, stating: "Bidvest engaged with shareholders in a pre-AGM call last week during which this particular resolution was one of the matters discussed. There have been constructive follow-up engagements with some shareholders subsequently."
The decisive vote is scheduled for December 1 during the Johannesburg-based company's annual general meeting. The outcome will not only determine the fate of the Olympic trip reimbursement but could signal broader shifts in shareholder expectations regarding corporate spending and governance standards.
Bidvest's largest shareholders include the Public Investment Corp., which manages South African government workers' pensions, Westwood Global Investments LLC, and Standard Bank Group Ltd., making their voting positions particularly influential in the final decision.
