JOHANNESBURG – The best paid executive in South Africa again is Whitey Basson of Shoprite (JSE:SHP).
This emerges from the latest Moneyweb survey of executive remuneration in the top 20 SA-domiciled companies. Shoprite ranked only 15th by market cap but Basson won the pay stakes by the proverbial mile.
His total package came to R627.6m. That included share options exercised worth R594.5m.
Even judged by his ordinary pay and benefits, Basson was SA’s biggest executive earner. This year, after a 33% pay increase, Basson was paid R32.1m – R10m more than SA’s second highest paid executive, Mark Cutifani of AngloGold Ashanti (JSE:ANG).
Christo Wiese, who is chairman of Shoprite and the remuneration committee, told me: “Those options were earned over 40 years. It is quite unfair to look at them as one year’s income. As you yourself wrote, Whitey built a R1m company into a R53bn company.
“If I could find another Whitey Basson, I would happily pay him a billion. A guy with his talent is terribly rare. And the performance is there.
“He keeps a team of extremely good guys together. They make 50m-60m sales a month in seven jurisdictions. It is highly competitive. It takes a guy with huge intelligence, a good education outstanding people skills – and Whitey gets his hands dirty.
“I certainly don’t have a reputation for paying more than I have to.”
Five years ago the man who made Shoprite into SA’s number one retailer raised a storm of protest with a pay cheque of R59m. Wiese says that bonus was also in respect of a decade of performance. He says Basson is 62 and has not been given further options.
Wiese says SA retailers are highly rated overseas and Shoprite and Pepkor’s top people are continually approached by headhunters from Dubai, Australia and Hong Kong.
Basson tops the pay stakes among the executives of SA listed companies (we excluded former SA companies domiciled in London, such as Anglo, SABMiller (JSE:SAB) and Old Mutual (JSE:OML)) but Shoprite ranked only 15th by market cap.
Basson received 10m shares at a price of 651c, compared to their value at the time of R62. The shares have subsequently risen to R102.
But Basson, whose share are now worth R1bn, is a poor man relative to his Chairman Christo Wiese, who has 85.6m Shoprite shares worth R8.6bn and another 276.8m deferred shares, whose votes control the company. Wiese effectively controls Pepkor and Shoprite and will be the biggest shareholder in Brait (JSE:BAT) after its impending R5.9bn rights issue, which includes acquiring 35% of Pepkor and Premier Foods from Wiese.
Shoprite’s total executive pay of R62.5m ranks third among SA listed companies. But the executives this year did poorly compared to last year. Deputy CEO CG Goosen received R6.4m, compared to R21.7m last year, of which R16.7m was in share options. Monty Karp, who heads the furniture operations received only R4.4m this year, compared to a total of R12.7m last year, of which R7.97m was in options.
B. Harisunder was paid R3.7m in 2010 compared to R20.9m in 2009. That latter figure included share options worth R17.6m. EL Nel also earned less in 2010 – R3.5m compared to R18.8m (R15.6m in options).
Wiese said it was important the Basson’s able lieutenants should receive recognition.
In its remuneration report, Shoprite claims that its executive pay is “competitive”. It says outside consultants are used to benchmark pay.
Shoprite has been by far SA’s best performing retailer in the past decade, far outstripping old rival Pick n Pay. There is no doubt that with such big share payouts, the interests of directors are aligned with those of shareholders. The amounts seem so large because the share price performance has been so stellar.
Shoprite has relatively few non-executive directors – only five compared to the nine executives. Of the non-executives, only recently appointed Edward Kieswetter CEO of Alexander Forbes (JSE:AFB) appears to be truly independent. Wiese, his son, and three of the others are close to Pepkor.
Shareholder activist Theo Botha, who went to London to criticise Anglo American (JSE:AGL)’s pay policy, is not alarmed at Basson’s remuneration:
“If the share options accrued over many years, that’s fair enough. Who could have foreseen years ago that Shoprite would oust Pick’n Pay from its number one status? Who could have predicted that the share price would have risen as it has? With hindsight, I suppose they could have put a collar on it, say a maximum of R200m. The share has done better than anyone hoped.”
Wiese ascribes huge packages to “the world in which we live”. He is surprised that these attractive packages are not increasing the pool of talent.
“At these prices there should be 12 Whitey Bassons but there simply aren’t”, he quips.
Tomorrow: The top 20 in SA’s pay stakes