Steinhoff Bows to Pressure Over Bonus Payments After Outrage

(Bloomberg) -- Steinhoff International Holdings NV shelved a plan to pay director bonuses after lawmakers questioned whether it was appropriate to release extra funds given the retailer has lost more than 90 percent of its market value amid an accounting scandal.

The owner of Conforama in France and Mattress Firm in the U.S. was planning to ask shareholders to approve payouts to boardmembers including Chairman Heather Sonn as a reward for their work trying to keep the company afloat. Steinhoff shares plunged in December after the retailer reported accounting irregularities, prompting urgent attempts to shore up the balance sheet and appease lenders.

South African lawmakers urged Steinhoff not to pay the bonuses last week, in light of the value lost to investors. Shareholders of the Frankfurt- and Johannesburg-listed company are to meet on April 20 in Amsterdam to vote on a range of proposals including the appointment of a supervisory board.

“It is apparent the motivation behind the proposals for additional one-off payments and for additional meetings has not been fully communicated,” Steinhoff said in a statement Thursday. “It should be noted that the directors concerned contributed significant time, in some cases on a daily basis for weeks on end up until the present day.”

Crisis Team

The company was planning to pay Steve Booysen, who has been a Steinhoff director since 2009, an extra 200,000 euros ($245,180). Sonn and fellow board member Johan van Zyl were due to be paid 200,000 euros and 100,000 euros, respectively. The trio are part of a crisis team put together by Steinhoff to help resolve the challenges caused by the scandal, though all three were on the board while the events that led to the crisis took place.

“That the proposal to increase the remuneration of certain independent directors, who seem to have been asleep at the wheel during what may turn out to be the biggest corporate scandal in the history of this country, was made at all, was a spectacular failure of judgment,” David Maynier, shadow finance minister, said in emailed comments.

Steinhoff and former Chief Executive Officer Markus Jooste, who quit in December, are being investigated by numerous regulators and law authorities around the world. PwC is probing Steinhoff's finances, with a particular focus on off-balance-sheet structures and third parties.

While Booysen, Sonn and Van Zyl requested that their bonus plans be removed from the AGM agenda, the payments could yet be reconsidered “at an appropriate time” by a newly constituted supervisory board and its remuneration committee, Steinhoff said. Meanwhile, the reappointment of the directors is “essential for the recovery of the company and its future restructuring.”

The retailer will also ask shareholders to approve the reappointment of Deloitte LLP as auditors for the 2018 financial year, which starts in about two months. Deloitte triggered the share price slump when it refused to sign off on the 2017 accounts, though it has been criticized for approving financials for the two previous years that now have to be restated.

Bruno Steinhoff, the 80 year-old who founded the company in 1964 and retired from the supervisory board on Feb. 28, has reduced his holding in the company to 3 percent, from 4.57 percent as of Dec. 14, according to a filing made to the Netherlands' Authority for the Financial Markets on Wednesday.

--With assistance from Joost Akkermans and Alexander Kell

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Bowker, John J. Edwards III

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