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‘Just eat’ – a lucky escape for one and an appropriate moniker for most listed companies

A look at Massmart’s performance and excessive executive pay, Old Mutual (and the fallout of that Covid bonus?), and the dual challenge that’s leading to increasing desperation from Naspers/Prosus.
What are Massmart executives getting paid for? Image: Supplied

For an organisation that has a reputation for extreme efficiency and a determination to eradicate unnecessary costs wherever they might creep in, Walmart has been remarkably tolerant of the inefficiency and waste that for years has dogged its 52.8%-owned Massmart.

Mind you, Walmart’s tough reputation seems to be based on its all-powerful US business; its patchy performance outside the US suggests a business success story that may not be fully exportable.

However, now that it has replaced most of the executive committee it inherited in the 2011 deal, perhaps Walmart might be able to put its stamp on the South African business.

But here’s a thought. Last week 14.8% of Massmart shareholders voted against the remuneration implementation report at the AGM. In terms of the flabby JSE requirements that’s not enough to spark the obligation that Massmart engage with its shareholders.

In the Massmart context, it should have been. The results of the AGM reveal that 89.2% of shareholders were represented at the meeting; that included the 52.8% accounted for by Walmart. If you strip out the Walmart contingent, which inevitably voted in favour of the report and its implementation we have 14.77% of 36.4% voting against the implementation report – equivalent to around 40%.

So it’s reasonable to say that a significant chunk of Massmart’s minority shareholders are unhappy about the remuneration paid out to its investee company’s executives.

And they should be. In terms of profits Massmart is going nowhere, indeed it is sliding dangerously backwards.

Yes, of course Covid and the attendant lockdown hit the financial 2020 results – but well before that things were not looking good for the unwieldy retail group.

Having peaked at just under R200 in 2013 the share price slumped to a low of R19 during the worst of the Covid lockdown period; it has since recovered to R60.

Having massively overpaid for the company back in 2011, the Walmarters back in Bentonville must have been looking on in horror as the Massmart executive team lurched from earnings of R1.3 billion in 2013 to earnings of R869 million in 2018 and then a loss of R1.3 billion in 2019 and, not-so surprisingly given Covid, a loss of R1.75 billion in 2020.


Throughout this period of patchy underperformance, the Massmart executives were generously remunerated by a remuneration committee, whose chair was also extremely well remunerated.

Remarkably, the 2019 remuneration report reveals that many of the poorly performing departing executives had to be given ‘exit’ payments; the remuneration committee, now under a new chair, explained that this was because of “contractual” arrangements.

The question is, if Massmart was an unlisted privately-owned entity, how much would it have paid its top executives for this value-destroying performance?

They might have received a reasonable guaranteed salary but it’s unlikely they would have been paid any bonuses or long-term incentives. And they certainly would not have scored exit payments.

How not to do things

Massmart demonstrates almost all that is wrong with executive remuneration at JSE-listed companies.

Year after year, its remuneration committee talked about all the boxes it had ticked, its use of benchmarking consultants, and its deep desire to ensure it was paying market-related packages to retain the best talent.

It was all a load of rubbish, expensive rubbish.

The remuneration committee might as well have said: ‘My mates on the executive committee pitch up for work every day and do try hard, so they deserve as much as the other guys in big listed companies get.’ End of story.

And why not? The members of the remuneration committee don’t have to fund the executives’ pay.

Indeed, by staying onside with the executives, the remuneration committee members secure their own well-rewarded positions.

Read: Patel’s plan to address the inequity of executive pay (May 2020)

All this generosity is being funded by anonymous shareholders. It’s almost as if it were for free. The only puzzling aspect of Massmart is why Walmart waited so long before acting.

Old Mutual 

On a more prosaic note, Old Mutual failed to secure the necessary support for its remuneration implementation report at its AGM on Friday.

No doubt the new executive team has done well to pick up the baton after it was pretty-much trashed by outgoing CEO Peter Moyo but perhaps the Covid bonus has irked some shareholders.

Given the general surge in share prices since 2020 lows there seems little doubt that executives of JSE-listed companies will score well in the coming years.

They shouldn’t need a Covid bonus.

It’s not as though they’ve been on the frontline.


There are growing signs that investors are getting increasingly frustrated with the desperation shown by Naspers/Prosus in wanting to deal with its JSE-dominance and Tencent-discount dual challenge.

“I’m having to devote much too much time working my way through every one of their new schemes,” remarked one London-based trader just hours after Naspers released a guide to the latest proposal.

And he sees no solution in sight.

“Their inability/refusal to use shares to fund acquisitions is making it extremely difficult to secure any significant assets in this area,” said the trader, before adding how lucky they were to escape “Just Eat”.




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Massmart want to compete against Checkers and Pick ‘n Pay and Spar? They think because they are a ‘Marican company we are automatically going to support them. Go home Massmart.

what bets wallmart takes this off JSE? Hopefully they or a partner or a fund were buying truckloads during the past year.

Still curious about the ‘obligation to engage with shareholders’ if the vote on remuneration is negative – does this amount to much more than inviting a few asset managers for a nice lunch and reminding them who really makes the decisions about the management of the company’s pension fund investments ?

I’m quite happy with capitalism…

But when execs get HUGE pay for losing SOMEONE ELSE’S money & destroying value – then it really is time to start asking questions.

There needs to be a better system for exec pay?!

End of comments.





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