Naspers: a prime example of the randomness of exec pay

The media giant’s remuneration report resembles a work of art, in its attempt to conceal this.
Image: Dwayne Senior, Bloomberg

Remuneration is, in large part, utterly random.

In early 2001 a Naspers executive spent some time trying to persuade the Naspers board of the potential of an investment he’d recently spotted in mainland China. CEO Koos Bekker was excited about it but other directors were concerned about the cost and the possibility the company was already over-exposed to the Chinese market, which so far had generated no returns.

In the shadow of the dot-com crash it was understandable that there wasn’t too much appetite for internet-based businesses. But eventually former Naspers exec Hans Hawinkels and Bekker managed to convince the board to pay up the $31 million for the 50%-plus stake in Tencent. A year later, with China and dot-com investments continuing to underwhelm, Naspers opted not to renew Hawinkels’ contract.

Almost 20 years later Naspers is paying Bob van Dijk, the CEO of its offshoot Prosus, hundreds of millions of rands annually in the desperate hope he might repeat Hawinkels’ miraculous achievement.

In 2020 Van Dijk’s remuneration (total guaranteed pay, short-term incentives and long-term incentives) added up to an eye-watering R281 million.

Of course that’s just one way of looking at Van Dijk’s remuneration package. Another way is to value the long-term incentives that were granted prior to 2020 and became available for Van Dijk to trade during 2020. On this basis Van Dijk scored over R700 million in 2020 alone.

It’s not just Van Dijk who’s doing so staggeringly well out of Hawinkels’ prescience: every other director on the Naspers (and Prosus) board has been able to secure riches beyond his/her dreams (and abilities) by dint of being in the right place at the right time.

Long-winded and random

Remuneration reports have become increasingly dense and long-winded affairs – perhaps in an attempt to apply a comforting gloss of science over randomness. In Naspers’ case the desperate hope is that if Van Dijk and his colleagues are “paid for performance” and in “line with benchmarks” and “sufficient to compensate highly attractive skills that are in short supply”, they will inevitably deliver the goods.

A core part of the “goods” in this instance involves a reduction in the discount between the value of Naspers/Prosus and its investment in Tencent. In the past week that discount has shrunk slightly. Sadly, for everyone concerned, that was thanks to the slump in the Tencent share price that followed US president Donald Trump’s threats against Tencent’s WhatsApp and had nothing to do with Van Dijk and his colleagues.

Trump’s WeChat assault endangers $280bn Tencent rally
Tencent shares lose $66bn in 2-day rout on WeChat ban

If the Naspers and Prosus’ share prices do not fall as much as Tencent (in the wake of this threat) the discount is reduced and Trump will have achieved far more than the Naspers board has been able to.

Yet more randomness.

A work of art

As it attempts to gloss over this randomness, it is inevitable that Naspers’ remuneration report assumes the characteristics of a work of art. It comprises 44 carefully sculpted pages of graphs and charts interspersed with motherhood and apple-pie references to ‘paying for performance’, ‘acting responsibly’, ‘building value’ and ‘frank dialogues with shareholders’. Remuneration committee chairman Craig Enenstein says he’s grateful to the group’s shareholders for their input into Naspers’ remuneration policy although he expresses some disappointment not to have achieved higher levels of support for the resolutions put to them at consecutive annual general meetings (AGMs).

“We’ve appreciated the frank feedback we have received from our shareholders and the spirit of partnership with which they have engaged with us,” says Enenstein in Naspers’ 2020 remuneration report, adding “This input and dialogue ensures the shareholders’ views are actively considered by the committee” and then, reckon some critics, totally ignored.

One of the many shareholders with a frank view on Naspers’ corporate governance, including remuneration, is Mike Martin of Active Shareholder. Active Shareholder, which advises NGOs how to vote at AGMs, has issued a damning advisory note to its clients, who include workers’ associations, churches and civil rights organisations.

Toothless shareholders

In that note Martin describes a governance system that is fundamentally influenced by the fact that ordinary shareholders can be outvoted on every single matter.

In essence the existence of Naspers’ A shares, which each carry 1 000 votes, means the company can operate like a privately-controlled unlisted entity.

“It is of grave concern that the board ignores the fact that up to 80% of the N ordinary shares oppose a resolution (in 2018) and then presents the same resolution at the next AGM,” says Martin, referring to the resolution placing ordinary shares under the control of the directors, which was opposed by 69% of N ordinary shareholders at the 2019 AGM.

The extremely high-voting A shares, which are tightly held by private entities, gives the board absolute control and ordinary shareholders have little effective say in how the company is run. With that level of control it’s hardly surprising that less than 50% of the directors are independent and 33% of non-executive directors are former executive directors. Or that the board can, in all seriousness, claim that after 105 years it remains satisfied that auditor is independent.

Martin acknowledges Van Dijk’s explanation for the control structure, which some analysts reckon is dictated by Tencent’s need to be in secure and friendly hands. But what particularly irks him is its use to push through a remuneration policy – despite opposition from around 60% of A shareholders – that is not only of such egregious generosity but also so complex that it must surely absorb much of the lucky executives’ attention. And it’s not just the executives; the non-executive directors are also recipients of eye-watering largesse.

Remarkably generous non-executive directors’ fees (an average of R5million) are topped off with a daily allowance of R62 500 “when travelling to and attending meetings outside home country”.

(The fact that Covid-related lockdown restrictions will reduce access to this particular honey pot this year is of little comfort to Martin.)

While most of Martin’s clients (and presumably those of Allan Gray and the PIC) will struggle to understand how a daily allowance of R62 500 could be spent, let alone justified, Naspers’ remuneration committee assures us that it is all “competitive, fair and reasonable”. The committee, we are told, conducts a regular benchmarking exercise to ascertain this; lest anyone suspect it is the result of randomness.

As such, this shockingly generous allowance might escape scrutiny at next week’s highly choreographed lockdown-AGM.



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Executive pay has always astounded me but this case is particularly egregious.

If a company does well: “It’s by virtue and vision of the CEO and other execs” – Reward themselves handsomely.

If a company does poorly: “It’s a tough market out there, hey” – Reward themselves handsomely.

It’s a joke. The real workers and value creators are ever-exploited.

My favourite is in “line with benchmarks”. if all the companies use the same policies obviously they benchmarks will point to them getting ever higher salaries.

Politicians embezzle money from the state and the public complains. Corporate giants reward themselves for their performance and enjoy money that they “actually earned” and still the public complains.
It’s truly impossible to make South Africans happy, it’s most definitely rocket science.

Agree – they reward themselves above and beyond…ALWAYS.

Start boycott the companies, by not supporting their shares/ stocks, products….

Once again a great article that calls out the naked emperor.

Paying an ex-eBay senior manager this type of money is absurd, and to think Bob will pull a rabbit out the hat is far fetched at best. Both his unsuccessful attempts to pay billions for a look into Just Eat and recently to go back into eBay should be more than warning enough. Even his own old alma mater don’t want him back – even with a better cash offer. (

So yes, concealing this in fancy words is just wrong.

There is no need for an international ‘competitive’ salary. One can argue the point if the CEO has or had achieved anything, but ‘just because’, does not carry water.

Work of art maybe, Picasso, hardly.

I used to think that Naspers executives should be rewarded if they managed to lower the discount to underlying holdings. But on reflection if there is any discount at all it means the market is valuing the management team at less than zero and they are detracting value from shareholders. Thus if there is any discount to underlying holdings – even if small, management should get no incentive while it persists. The company appears to exists to serve the remuneration and ego needs of the executives – were it not controlled it would have been unbundled and wound up. The discount exists because shareholders know that huge bonuses will continue to be paid to executives – apparently without limit (what’s to stop remuneration being again doubled from here?) – and more importantly that the same egos will lead to the risk that they feel the need to ‘do something’ and end up overpaying for assets. The JSE needs to make it a condition of listing that remuneration reports are voted on by a majority of all shareholders with no super votes.

In Dollars, Naspers is up year to date 6% vs 37% for Tencent. This is equivalent to tens of billions of dollars of value destruction.

End of comments.




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