A version of the ‘pathetic fallacy’ is encouraging us to hope that January will mark some sort of turning point in the destruction wrought by Covid-19; the attribution of the human condition to nature is encouraging us to believe that while 2020 was pretty much destroyed by the virus, 2021 – starting in two weeks – will be better.
Sadly that’s not likely to happen; things might pick up in the second half of 2021 if the global roll-out of the Covid vaccine goes according to plan, but even that’s not certain. Right now there’s no indication that any country with a democratically-elected government has cracked the crisis; the waves of destruction across the globe seem unrelenting.
It’ll be years before anyone can really say what did or did not work. In the meantime, on a personal basis, the most reasonable thing to do is be cautious.
And in the meantime shareholder capitalism is doing what shareholder capitalism does best – behaving as though the world might end after the next reporting period, so grab whatever you can as quickly as you can.
This unrelenting commitment to shareholder capitalism involves dishing out generous share-based awards to a select handful of employees and cutting all other costs wherever possible. It captures and redefines the notion of ‘essential worker’ from one who risks their life and livelihood in order to provide services at the frontline of the pandemic to an executive with access to the board.
From the very start the idea that “we’re all in this together” sounded more jingoistic than persuasive; rather like the World War II slogans designed to discourage the mass of the population from bailing on their leaders.
On the corporate front, 2020 – the year of Covid – has been characterised by depressed profits, share awards, share repurchases, and delistings, which explains why we’re not all in this together.
Ordinary employees and shareholders will not emerge from this year as well as the corporate elite will.
If you have any doubts, take a look at last week’s Sens announcements.
Remgro released details of not one but two years of share awards for its top executives; the 2019 award had been delayed by the unbundling of FirstRand. Group CEO Jannie Durand was allocated R44 million long-term share-based awards for each of 2019 and 2020. Given that the awards were valued at close to a five-year low there’s a good chance they will be worth considerably more than R88 million by the time they vest – between now and 2024.
Remgro subsidiary Mediclinic, whose hospitals seem to be in the eye of the Western Cape storm, also dished out some attractive awards to its executives last week.
Hopefully the hospital employees, who are risking their lives every hour of the day on the frontline, will also be rewarded. However, given that so many nurses are employed on an agency basis these days, there’s little chance of that actually happening.
And once again AVI’s Sens announcements were dominated by news of the allocation of share awards to its executives and their subsequent trading. It’s hard not to suspect this might be the core of that company’s business.
Prosus and Naspers
Prosus and Naspers are continuing to splurge out on their share repurchase programme. One of the great things about this programme is the level of disclosure provided by the companies. Each week shareholders are provided with details of the number of shares repurchased and the price.
So we know that between December 7 and 11 Prosus spent R1.6 billion repurchasing 513 084 Naspers N shares.
This is the sort of disclosure the JSE should consider requiring from every company that buys back its shares; the current level of disclosure is a joke and is open to abuse.
Presumably the extremely hard-working members of the Naspers/Prosus remuneration committees will be taking all of these repurchases into account when it comes to toting up this year’s remuneration; particularly if closing the Tencent discount is included as one of the executive performance metrics.
Meanwhile, there have been fascinating reports about a group of Stellenbosch businesspeople preparing a case – getting affidavits, collecting evidence – that could be used by the National Prosecuting Authority against former Steinhoff CEO Markus Jooste. No names of who’s involved but we can probably guess. It should help to speed up the excruciatingly slow dispensing of justice in this matter.