As to who is calling the shots at Naspers …

Sanlam isn’t just sheltering Naspers’s extremely unpopular remuneration policy, it is enabling the board to ignore its ordinary shareholders – Active Shareholder.
Ironically China’s stance on prosperity might be the only hope ordinary shareholders have for some moderation on the Naspers pay front. Image: Moneyweb

In the covering note to its proxy voting recommendation for the latest Naspers AGM, Active Shareholder – a not-for-profit company that helps socially responsible investors to exercise their company rights – describes the chair’s statement that the company is “committed to high standards of corporate governance” as problematic.

The problem for Active Shareholder is the control structure. A mere 0.22% of the total Naspers shares (A shares) have 1 000 votes each and thereby account for 68.8% of total votes.

In 2020 this meant that six resolutions were passed despite significant opposition from the holders of ordinary N shares.

Remarkably, one special resolution was approved despite opposition from 88% of shareholders.

“Despite this extraordinary level of opposition the board continues to present the same resolutions each year; it’s very hard to understand the chairman’s statement in light of this,” said Active Shareholder.

At the 2021 AGM (on Wednesday) the same resolutions were presented with largely the same high level of opposition from the ordinary shareholders.

The offending special resolution, to place unissued shares under the control of directors, was opposed by 86% of shareholders this year.

All the resolutions were passed thanks to the 100% backing from the A shareholders.

Ownership of the A shares vests in a complex and opaque structure that includes three key entities – Nasbel, Wheatfields and Keeromstraat. In turn, control of these three entities appears to vest, to a substantial degree, with Naspers chair Koos Bekker, Naspers director Cobus Stofberg, and Sanlam.

A spokesperson for Sanlam confirmed to Moneyweb that Sanlam Capital holds an equity stake in Wheatfields, with underlying holdings in Naspers A shares held directly or via Keeromstraat and Nasbel.

Confidential agreement …

“Wheatfields has a confidential shareholders’ agreement in place, which regulates the shareholder relationship between the shareholders of Wheatfields; this stake is managed on behalf of Sanlam Capital by Sanlam Investments,” said the spokesperson.

She added that when Sanlam Investments votes on decisions to be taken by Wheatfields the investment merits are considered alongside input from the corporate governance unit at Sanlam Investments.

The 100% backing from A shareholders on every resolution suggests Sanlam supported all of them, including the two remuneration-related resolutions.

In this it is at odds with the majority of Naspers investors, which includes most of the large South African institutions, given that only 34% of ordinary shareholders voted in favour of the remuneration-related resolutions.


Active Shareholder’s Mike Martin said Sanlam is not only sheltering Naspers’s extremely unpopular remuneration policy, it is also enabling the Naspers board to ignore its ordinary shareholders.

‘No conflict’, says Sanlam

Sanlam Investments is satisfied there are no conflicts of interest influencing its voting decisions; it does not currently manage assets on behalf of the Naspers Group.

“Sanlam Investments takes decisions solely based on investment merits and good governance and the Sanlam Group is fully satisfied that there are no conflicts of interest associated with the manner in which Sanlam Investments has voted in this instance,” the spokesperson told Moneyweb.

Nasbel’s considerable influence on Naspers also raises questions about the independence of three directors on the Naspers board tagged as independent – Rachel Jafta, Ben van der Ross and Debra Meyer.

“It’s incomprehensible that these directors can be called independent when they serve on the board of the controlling shareholder,” said Martin.

There is the additional fact that Van der Ross has been on the Naspers board for 22 years and Jafta for 18.

At Wednesday’s AGM Jafta, who is chair of the group’s nominations committee, assured the meeting that the board “had rigorous processes in place to manage actual or potential conflicts of interest should they arise”.

She was responding to questions about potential conflicts of interest that Naspers’s lead independent director Hendrik du Toit might have as a result of his position as CEO of asset manager Ninety One, which is invested in Naspers.

“The nominations committee and board regularly review the independence of our directors,” said Jafta, adding that they had no concerns regarding the lead independent director.

With control of Naspers resting securely in the hands of the A shareholders, there is little hope the remuneration committee will respond to the sustained criticisms of the ordinary shareholders about the inappropriate and excessive levels of executive pay.

Light on the horizon?

However, a question at Wednesday’s AGM from non-profit shareholder activism organisation Just Share raises the spectre of a far more effective source of restraint, namely the Chinese government.

The Chinese government’s recent aggressive regulatory approach to its powerful and wealthy tech companies has, in part, been motivated by a desire to “crack down” on wealth inequality and excessive executive pay.

President Xi Jinping has recently placed considerable emphasis on the country securing moderate wealth for all rather than just a few. Planned measures for his ‘common prosperity programme’ include curbs on “excessive” incomes and encouraging the wealthy to give back more to society.

Just Share told the AGM that Tencent’s prompt response has been to set aside $7.7 billion – subsequently increased to $15 billion (R223.5 billion) – for its own “common prosperity program”.

Just Share wanted to know, given Naspers’s record-breaking pay levels, would the Chinese government’s tougher new approach be taken into consideration by Naspers’s remuneration committee in future deliberations.

All inputs ‘considered’ says Naspers Remco 

Remuneration committee chair Craig Enenstein replied: “We take a very wide array of inputs into thinking through the totality of the remuneration structure, the way we design our incentives, the way we think about our metrics trying to make sure that we are creating relevant and challenging obligations for management to drive value ultimately for shareholders and tie that back and create alignment and transparency for you the shareholder. We will continue to take all inputs into consideration.”

“I’m not sure if that was a ‘yes’ or ‘no’,” Martin said after the meeting, describing the remuneration committee as out-of-date and out-of-touch.

The Chinese government’s common prosperity programme might be the only hope ordinary shareholders have for some moderation on the Naspers pay front.



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What I do not understand is if you as a shareholder is so unhappy about something – why do you not just cash in and find another investment???
It is not as if the remuneration policy cost you any money !!

Agreed, I sold out a few years ago when the hired help arrogance became truly offensive. There is a world of great companies out there and they certainly beat the pants off Naspers performance the past few years. Eg Apple dividends alone past five years is more than Naspers share price gain past five years. Incomparable quality of earnings, quality of management.

Still makes for an interesting soapie to watch 😉

Not sure I follow you – if the CEO gets R275 million in one year it definitely do cost the shareholder. It cost the R275 million. If lets say he only got R75 million and the other R200 million would be paid out to shareholders as dividend then well… I am not sure that I am following you about the remuneration?

You do realize that the company doesn’t pay R275million out to him in cash right? It’s not an expense. His basic salary is probably only R20million. The rest of his remuneration is issued in shares that vest over a few years that is purely performance based.

Elon Musk for example doesn’t even receive a salary, he is remunerated exclusively with vested shares when certain performance benchmarks are achieved.

It doesn’t cost the company anything. It’s not an expense. So to say “Oh shareholders should get the other R200million” is just ignorant. And it’s not even possible. Executives are issued shares, usually they have to INVEST their own money into the company in order to receive those shares. Dischem is a good example: the successor to Ivan will have to invest his own money in order to receive vested shares.

The goal is value creation through the share price, right? You issue shares to your executives so they have an incentive to grow the value thereof for ALL shareholders.

Honestly, don’t be dumb.

Shareholders should boycott this approach….forever. Naspers/Prosus is a sinking ship, that just had a new paint job. I am surprice the securities commission does not charge or fine Naspers/ Prosus.
With the CEO’s that make +R270m a year… should know they care nothing about the shareholders. And Sanlam that approve/ support this, might have the same tricks up their sleeves.
Get out while you can.

What would be fascinating is to find inside Sanlam what they value their A shares at?

I want my remuneration for my portfolio loss during jse downtime.

You want Sanlam to go against Kobus(1) Bekker and Kobus (Kango) Stofberg????
It wont be sporting, old chap – – – these guys have each others back and will never interfere in a profitable powerful structure.

“A” shares and VIE – – – – will come to a very unhappy ending in my view

”Not everything that can be counted counts, and not everything that counts can be counted”
Albert Einstein

Why don’t all the Naspers ”naysayers” who are still holding on to their shares – sell it or sell it short – which will be at their peril anyway?

I believe that the ”A Shares” (1 000 votes each that account for 68.8% of total votes) are close enough to the market and over time developed a trust based association with all shareholders but distant enough to allow independence and freedom of choice!

Tencent has driven all value accretion in Prosus/NPN since early days of M-net/Multichoice. Those days gave rise to obscene arrogance unfortunately. If anything this is what annoys most people close enough to experience it and yes, other than Tencent, their is nothing of value.

Agree and now Tencent has been hamstringed by the Chinese Government, profit margins of Naspers will probably be in for some volatility and down scaling.
The thing is, a big company only needs a different share class (like this N shares) with bumped-up special voting rights when the executives and string puller main shareholders have shenanigans up their sleeve. When the company do right by their ordinary shareholders (owners of the company), no big company needs this bull***t trick.
The time is as ripe as it ever will be to dump all direct holdings in this counter.
This is also the reason why I don’t like Top 20, Top 40 or Top 50 Index Funds. The concentration of Naspers in such funds is just to high. If an investor have to make use of index funds then rather consider a so-called capped Index Fund and go wider to i.e. Capped Top 50 or even Alsi so as to minimise exposure to communistic run companies that manoeuvres to limit the rights of its ordinary shareholders. Don’t participate in their control games.

Tech companies invest heavily in products that usually operate at a loss for YEARS before shareholders get a positive return. You cannot critisize Naspers for ‘not having value other than Tencent’ because that’s not true. They continually invest in start-ups that will yield returns for shareholders in years to come. Critisizing Naspers for ‘only having value in Tencent’ is shortsighted and ignorant. And even if Tencent is the only holding of Naspers it doesn’t make a difference. They are the original investors and that is why they are relying on their original investment to pay out dividends to its shareholders as well as investing in future growth. They are doing exactly what they are supposed to do.

Honestly… Why are people so sour?

How much do directors deserve to be paid if by them not being there shareholders would be R1 trillion better off?

Executive renumeration is internationally benchmarked. For the size and weight of Naspers/Prosus on the stock exchanges they are paying their executives salaries and incentives that is market-related. You cannot attract good talent as an international tech company if you only pay your executives $2m.

And shareholders do not and cannot run the company. That is why there is a Board. So to say that shareholders will be better off without the Board is the dumbest thing I’ve ever heard. There will be NO value creation and shareholders will lose their investments.

R270 million sounds like an excessive amount here in South Africa, but Naspers don’t operate just in SA. They are a multi-national tech company. $18 million remuneration for a director of a multi-national tech company is not a lot of money. Most people seem to forget that the majority of earnings for a director is performance based. You have to incentivise your Board in order to achieve growth.

Tencent’s director received over $30m un remuneration. That’s almost double what Naspers paid out.

If the directors resigned, the stock price would almost double because it trades way below liquidation value. The directors are adding negative value by their mere presence. If a stock trades below liquidation value the directors by definition are detracting value. There IS no value creation with these directors. Indeed there is value destruction.

SA’s companies’ problems started when they sourced CEOs and consultants from overseas.
Look at all the skeletons next to the road: It started with SAA. (Coleman Andrews)
Woolworths, Sasol, Old Mutual, etc. And now Naspers. The foreigners are skimming all the nice cream from the top from our blue-chip companies and then ride off into the sunset with bags full of oodle.
When will we learn?
I sold all my Naspers and Prosus shares and moved it into Apple – getting dividends, share buy-backs, and capital growth. Win-win.

End of comments.



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