Scoring while shareholders lose: Why Woolies needs the Companies Act

There’s still no indication of when the final amendments to the Companies Act will be implemented. The last time any changes were made was December 2024, and no-one seems to know what’s holding up implementation of the controversial sections 30A and 30B.

Dealing with remuneration, these were expected to see the light of day last June, but June came and went, and nothing appeared.

The change of ministers might have held things up, but it doesn’t explain the continued delay. It could be down to political sensitivity. Or not.

Recall, there’s the requirement to disclose the gap between the highest and lowest paid in the organisation. And there’s also the plan to dump the non-binding advisory vote on remuneration and replace it with something beefier.

Whatever the reason for the delay, most legal boffins reckon the amendments will be out sometime during 2026.

And when they are, one of the first listed companies to bear witness to its effectiveness could very well be Woolworths.

This food and clothing retailer has had a vexed relationship with its shareholders for several years, much of it centred around the group’s remuneration. The low point was reached at the 2020 AGM, when just 18% of shareholders voted to support the remuneration implementation report. That was an all-time record for a JSE-listed company.

It wasn’t just the decision to give outgoing CEO Ian Moir a generous exit package, there was also the sign-on award made to incoming CEO Roy Bagattini.

To persuade the former Levi’s America head to take over the helm of this troubled international retail group, devastated as it was by the ill-considered acquisition of Australian retailer David Jones, the remuneration committee awarded him 1,432, 537 Woolworths shares.

The Covid dive  

Bagattini could cash in 25% of these shares after year three; another 25% after year four; and the final 50% after year five.

At the time of the award – February 2020, just as global equity markets were taking a Covid dive – Woolworths was trading at R37.87. Shortly afterwards, the share slumped to a low of R27.71. The R37.87 meant the 1.4-million share grant was worth a reasonable R54.2m.

However, in the five years and five months between his appointment and end-June 2025, this share award has helped boost Bagattini’s cumulative pay to a hefty R352.8m. Over the same period, investors have watched on as the share price recovered to a high of R78 in late 2023 before faltering and slumping back to its present R54.

If things had worked out well and the share price continued upwards, Bagattini’s sign-on bonus would have been worth well over R100m. That didn’t happen. The share price has essentially just recovered from Covid – but he has still done very well, and decidedly better than the shareholders.

Those who didn’t sell out at R78 will be struggling to see the alignment of interests between the executives and shareholders that successive remuneration reports claim their policy achieves. Consider that the present share price of R54 means Woolworths has returned all of 18% to investors who bought the share on the dip five years ago – excluding dividends.

No wonder long-term investors are increasingly irritated that successive committees have refused to take their concerns seriously.

‘Extremely frustrating’  

One of these is Asief Mohamed, CEO of Aeon Investment Management, who finally decided he’d had enough and sold out of Woolworths.

“We’d had many discussions about remuneration with them,” he tells Currency. “But nothing ever happened, it’s extremely frustrating.” And, most damningly, Woolies’ share price is now where it was just before Bagattini arrived.

“He’s hardly added any value,” says Mohamed.

What makes it all the more frustrating is that every year the remuneration chair acknowledges the useful engagements held with shareholders, but then ploughs on almost regardless.

Well, why not?

After all, the most a shareholder can lob at the board is a “non-binding advisory vote”. Rather like “being savaged by a dead sheep”, as British politician Denis Healey said of his opponent Geoffrey Howe.

But the introduction of sections 30A and 30B could change all that.

Then, if the remuneration report fails to receive approval from at least 50% of shareholders at an AGM, the remuneration committee is obliged, at the following year’s AGM, to explain how the shareholders’ concerns have been taken into account. And, much more significantly, the members of the remuneration committee must stand for re-election of the remuneration committee at this second AGM.

If the remuneration report fails a second consecutive year, the remuneration committee members must stand for re-election as directors and are not allowed to serve on the remuneration committee for two years.

It’s designed to get the sort of response Mohamed and other frustrated Woolworths’ shareholders have pointlessly engaged for.

That Woolworths is likely to be one of the early targets of this beefed-up law was evident in the response to the group’s recently released disappointing trading update.

Bottom-line blues 

There was no problem with the top-line growth, particularly the solid increase from “Fashion, Beauty and Home”, though Food’s performance was below expectations.

The major problem was the seeming inability to convert this into decent bottom-line growth.

Even allowing for factors that had boosted the previous year’s earnings (profit on the sale of the Bourke Street property), and excluding once-off costs incurred in the review period (the restructuring of Country Road’s operating model), the resulting adjusted headline earnings per share figure for the 26 weeks to December 28 2025 is set to be tepid. The expected range is between minus 2% and plus 3%.

“It’s a big disappointment,” Sasfin’s Alec Abraham tells Currency. “I’d expected a much stronger bottom line primarily because interest payments would be lower thanks to the R660m received from the sale of the Bourke Street property.”

While analysts are refraining from excoriating comments until they see the full picture (due to be released on March 4), investors have voted with their feet.

On the day the trading update was released the share price plunged 6%. From R59.75 ahead of the release the share is now down to R54.16. Worse still, there seems little on the horizon to justify a reversal from this level.

Woolworths’ shareholders have been here before – going nowhere with a business that appears to have potential. A sort of corporate ennui. Years ago, analysts started pushing for a breakup; the sell-off of Australia-based David Jones and the hiving off of the outstanding South African food division.

Six years and R352.8m later, there are whispers of a post-Bagattini era.

The prospect of sections 30A and 30B might at least provide some comfort for shareholders next time around.

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_{Top image: Woolworths.}