(Bloomberg) -- Raymond Ackerman’s family is giving up some of their voting power in Pick n Pay Stores Ltd. to help the struggling South African retailer woo investors. 

Ackerman Investment Holdings Pty Ltd., the family’s holding company, will reduce their voting control to below 50% after a planned rights offer is completed. The move helps “change perception outside the company,” Pick n Pay’s Chief Executive Officer Sean Summers said in an interview in Bloomberg’s Johannesburg office.

The Ackerman family isn’t alone in controlling the fate of its company. Meta Platforms Inc.’s Mark Zuckerberg and Alphabet Inc.’s founders have a huge sway over their firms through dual-class shares that give them greater voting rights than the other. Many investors abhor such a structure, which raises corporate governance concerns. Johann Rupert, South Africa’s richest man, controls Richemont through a similar set up. 

“The appalling performance of Pick n Pay over a decade is good evidence then that family control is not always a good idea,” said Shane Watkins, chief investment officer at All Weather Capital Pty Ltd. “The problem with control structures is it allows pretty much one person to make the important calls and if they get it wrong, there can be very serious consequences.”

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Pick n Pay’s shares have dropped 30% in the past year compared with a 31% gain in larger rival Shoprite Holdings Ltd. Pick n Pay also announced its first annual loss on record for the year ended Feb. 25, according to data compiled by Bloomberg.

Summers, who was rehired as CEO last year, has a three-year turnaround plan including selling shares in its Boxer unit for as much as 8 billion rand ($446 million) and raising 4 billion rand in the rights offer.

“The balance sheet was completely upside down, with a funding structure that was patently against us,” Summers, 70, said. Still, Pick n Pay finished up its initial investor roadshow for Boxer last week and “the response has been phenomenal,” he said. 

The structure of founders having more voting power was common in Africa’s most-industrialized nation during years of apartheid-related isolation. Though, that’s changing now. Other tycoons have also given up their grip on the companies they founded. 

Dis-Chem Pharmacies Ltd. co-founder and CEO Ivan Saltzman in 2021 sold a portion of the family’s shareholding to improve liquidity in the trading of the shares — and to provide an incentive in retaining key executives.

Christo Wiese has held extra voting shares in Shoprite for more than 40 years. It was the use of this stock that ensured his re-election as chairman in 2019. 

While he gave up that position a year later, the 82-year-old still sits on the board of Africa’s largest food retailer. That’s even as his economic interest dropped when he sold Shoprite shares after losing about 59 billion rand when Steinhoff International Holdings NV imploded in late 2017.

“A lot of our family owners in South Africa overstay their welcome,” said David Shapiro, who has more than 50 years years of experience on Johannesburg’s stock exchange and is chief global equity strategist at Sasfin Securities. “Though to actually move out is a very difficult decision to make.”

Wiese has argued that a significant shareholder is important when there are big decisions to be made and that “you don’t just parachute people in.” 

Stephen Saad, the founder and CEO of Aspen Pharmacare Holdings Ltd., agrees. He has been key in growing Aspen into Africa’s largest drugmaker. He is the single biggest individual shareholder with about 13% of Aspen’s stock but doesn’t control the company through special voting shares.

While Pick n Pay expects the new structure to help lure investors, the retailer will still be closely associated with its founding family, Summers said. 

“Pick n Pay is inextricably linked to the Ackermans,” he said. “For those that have an itch or irritation with the control structures, I say, Pick n Pay without the Ackermans is worse off.”

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--With assistance from Amogelang Mbatha and Jennifer Zabasajja.

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