Naspers’s remuneration committee includes individuals with impressive-sounding CVs, so it’s disappointing that the best they can do to justify the egregiously generous remuneration ladled out to CEO Bob van Dijk and CFO Basil Sgourdos is repeat the same tired old excuses.
In its recently released remuneration report the committee says it believes in “pay for performance” and that it is “comfortable with bigger rewards for those that make the highest contribution”, which is why the two executives are R276 million and R158.3 million richer respectively.
Just in case you think the pay-for-performance and comfortable-with-bigger-rewards explanations are remarkably trite in the context of eye-watering remuneration packages, the committee goes on to explain that its “reward system” must help attract and retain the best talent around the world “in a fair and responsible way”. What bland, self-serving, uninformative tosh.
Naspers’s results for financial 2020, excluding Tencent (over which the executives have no influence), were at best pedestrian.
The committee evidently operates on the basis that if its remuneration levels are among the best in the world, then its lucky executives must be among the best in the world. Essentially, they are being paid generously in the hope they will deliver generously. What lucky sods they are to be so comfortably entrenched in what US commentator Steven Clifford describes as the “CEO pay machine”.
Is Tencent’s world about to change?
Talking about Tencent, can it be much longer before international investors face restrictions – legal or otherwise – on investing in China-controlled Hong Kong-listed companies?
It was all well and good to pile into variable-interest-entities such as the extremely attractive Tencent while Hong Kong had a semblance of independence from China, but that has all changed.
Leaving aside the fact that the bulk of Hong Kong residents had severely limited rights under British rule, international opinion is turning against the Special Administrative Region since China has introduced tough new security laws.
Establishing the pecking order
On more prosaic matters, it looks as though the guys behind Country Bird are heading into another bidding war over a chicken-and-egg investment. A few weeks after Country Bird bought up Zeder’s 30% stake in Cape-based Quantum Foods at R5 a share, with the possible intention of going for control, another bidder emerged out of the blue.
Luxembourg-based investment fund Silverlands was the buyer behind the recent purchase of a 32% stake from a variety of institutions. If it teams up with Quantum management, Silverlands will be part of a block controlling over 50% of the company. That would put an end to any control ambitions Country Bird has.
Four years ago, after a long drawn-out and fractious battle, Country Bird was also thwarted in its bid to get control of Sovereign Foods. If it can sell out at R6 a share it will have done well out of its brief investment. Or might we be in for another drawn-out affair?
Quantum has been a great if understated investment, even for shareholders who didn’t manage to sell out when the share recently reached a high of over R7.
Another round for the winners in M&A
News that Steinhoff is selling Conforama France for a nominal sum is a reminder, if one was needed, that the undisputed beneficiaries of mergers and acquisitions are the advisors, lawyers and bankers.
They scored when Conforama was purchased not too many years ago in a widely celebrated deal, and they’ll score again as it is sold off.
The Steinhoff shareholders didn’t do quite so well.
One of those shareholders is Christo Wiese who must have spent much of the past three years ruing the day he ever clapped eyes on Markus Jooste or thought Steinhoff was a great vehicle to use for the international expansion of his business interests.
Last week it seems Wiese’s bank funders forced him to sell off around a third of his remaining stake in Steinhoff.
About two months after the December 2017 meltdown Wiese’s banks sold a huge chunk of Steinhoff shares that he had used to secure margin loans.
That forced sale took Wiese’s stake to 6% from 20.52%. Last week’s forced sale of another 2.3% of Steinhoff’s shares takes his stake to just under 4%.
Telkom splurging on its execs
Telkom isn’t letting minor issues such as rising debt levels and declining profits stop it from splurging out on share repurchases. Last week it spent R233.6 million buying back shares, which will be used to back the inappropriately generous remuneration packages awarded to its executives.
The shares were repurchased at between R29 and R35 a piece, up from the recent low of R15 hit in March, but well off the pre-Covid lockdown trading levels.
Even though the share repurchase may appear attractively priced it is galling that the shares will now be dished out to a management team that has failed for so long to come up with a profitable long-term strategy.
As with Naspers’s remuneration, this seems neither fair nor responsible.