Loss-making Hulamin awards bosses R3.2m in share incentives

Pietermaritzburg-based aluminium semi-fabricator Hulamin has awarded its CEO, company secretary as well as a director in one of its major subsidiaries performance share incentives worth just over R3.2 million.

The move, which comes despite the small-cap posting a wider annual loss of R1.4 billion in June and retrenching staff last year, was announced in a JSE Sens statement on Wednesday.

Read: Focus shifts to Hulamin as it hits losses, plans job cuts

Hulamin has awarded its long-time CEO Richard Jacob with 932 150 “performance shares” worth just over R2.1 million. Company secretary Willem Fitchat has been awarded 195 727 shares worth R446 805.60, while Marlene Janneker – a director of Hulamin Operations Proprietary Limited – has been awarded shares worth R766 630.44.

All three individuals have been with the company since the 1990s when it was part of the Tongaat Hulett group. Hulamin was unbundled from Tongaat Hulett in 2007 and its share price traded at around R40 when it listed on the JSE separately. Jacob was appointed CEO in 2010.

Jacob, Fitchat and Janneker have accepted the performance shares, however the shares will only vest in August 2023. These shares have been valued at R2.28 per share, more than twice the current trading price of the company’s shares.

Hulamin’s share price closed almost 1% down on Wednesday at R1.08, however the stock has plunged over 50% this year and by around 90% over the last decade.

“Shareholders are advised that Hulamin has made awards of shares linked to the performance of the company [“Performance Shares”] in terms of its Equity-Settled Conditional Share Plan… The Performance Shares will be settled in a ratio of 1:1 with Hulamin ordinary shares on vesting,” the group noted in its Sens statement.

“The awards are deemed values based on a 30-day volume-weighted average price of a Hulamin share of R2.2828 as at 31 December 2019 calculated in terms of the guidelines of
the Share Plan… The transactions took place off-market and the requisite clearances have been obtained,” Hulamin added.

Hulamin awarding these performance shares to the trio have raised the eyebrows of shareholder activist Chris Logan of Opportune Investments, and Cy Jacobs of 36ONE Asset Management.

“Performance… What performance? It’s a total anomaly to me,” Logan told Moneyweb in an interview on Thursday.

“When Hulamin listed in 2007, its share price was around R40 a share… I believe the company had a market cap of around R8.6 billion back then. While there have been further rights issues, the company’s share price is trading around the R1 mark today. Its market cap has plunged to around R348 million currently,” he pointed out.

“Hulamin’s share price has declined even more than Tongaat Hulett has during this time… Since listing in 2007, shareholder value has been decimated at Hulamin while company insiders continue to make a fortune,” added Logan.

Meanwhile, in a tweet on Wednesday Cy Jacobs highlighted the issue saying more compensation is in line for Hulamin’s execs despite having “delivered nothing but tears for shareholders”.

Hulamin : More performance comp for execs when they have delivered nothing but tears for shareholders. Heavy management cost structures will erode all equity soon unless changes are made quickly. Total board comp 24.7m for 2019, thats 7% p.a of market cap #Shareholdersvote✅

— Cy Jacobs (@Cy36ONE) September 2, 2020