Secret Society: Broederbond at work? – Naspers CEO paid R1.3 billion in salaries and bonuses – My Comments
Bob van Dijk has received R1.29 billion in salaries, bonuses, and long-term incentives since he was appointed Naspers CEO in April 2014.
Van Dijk took the reins from Koos Bekker, who served as Naspers CEO from 1997 to 2014 and now serves as non-executive chairman at the company.
Under Bekker’s tenure as CEO, Naspers invested in Tencent Holdings, signalling its evolution into a global internet and entertainment group.
Bekker grew Naspers’ market cap from $1.2 billion to $45 billion, but he earned no salary and received no bonuses or perks as CEO.
Instead, Bekker was compensated purely through stock option grants that vested over time. This strategy paid off handsomely.
According to Forbes’ billionaire list, Bekker is the fourth richest South African, with a net worth of around R39 billion.
Van Dijk, in comparison, receives a high base salary, short-term incentives, long-term incentives, a pension, and other benefits.
However, Van Dijk must hold 10 times his annual salary in Naspers and Prosus shares.
His total remuneration mainly consists of a 10% base salary, a 10% cash bonus, and 80% long-term incentives.
His long-term incentives in 2022 comprise:
Performance share units – 60%, based on the growth of consumer internet assets, excluding Tencent.
Share Appreciation Rights – 32.5%, based on the valuation of unlisted consumer internet businesses, excluding Tencent.
Share Options – 7.5%, based on share price growth.
At the current Naspers share price, all of Van Dijk’s share options awarded between 2017 and 2021 are out of the money – i.e. below its strike price.
The strike price ranges from R2,755 to R3,494 per share. Van Dijk has ten years to exercise his options after they have been awarded.
Even though Van Dijk may not currently benefit from these share options, he still made million from previous options.
He recently sold R1.6 billion in Naspers shares when the company was on a buyback spree.
The sale was related to the exercise of 832,000 ordinary share options that Van Dijk was awarded at the end of March 2014. These shares were vested over three years, from 2017 to 2019.
Van Dijk disposed of 675,415 shares “to cover taxes and other related costs”, while the remaining 156,585 shares will be transferred to his name.
The options had a strike price of R1046.88, and the average price of shares sold was R2428.43 – translating into a potential profit of R930 million.
The average sale price was 27% higher than the share’s closing price before the company share buybacks were announced on 27 June 2022.
Koos Bekker, Naspers chair
Bob van Dijk’s remuneration
Naspers’ remuneration policy has received criticism from many investors and shareholders over the last few years.
Zwelakhe Mnguni, CIO at Benguela Fund Managers, described Naspers’ executive remuneration as an “enrichment scheme”.
Many shareholders argue that Naspers management refuses to unbundle Tencent as a way to protect the poor performance of their other investments.
They made their voice heard at Naspers’ annual general meeting (AGM) last year, with 66% of the N-class ordinary shareholders opposing the company’s executive remuneration.
At last month’s AGM, ordinary shareholders again rejected Naspers’ executive pay policy.
However, N-class ordinary shareholders only have one vote per share, while unlisted A-class shareholders have 1,000 votes per share.
It made the opposition to Naspers’ remuneration policy from ordinary shareholders near-irrelevant, and it was officially “endorsed”.
Naspers said it aims to be fair and responsible in its remuneration practices and have a pay-for-performance remuneration strategy.
Naspers’ remuneration committee chair, Craig Enenstein, said its remuneration philosophy underpins its strategy to achieve its business objectives.
“Our commitment to pay for performance and alignment with shareholder value creation drives all our remuneration activities,” he said.
He said the remuneration for Naspers’ executive directors consists of a base salary, STI, LTI, pension, and other benefits.
Naspers CEO Bob van Dijk’s remuneration since he took office, provided below, illustrates the company’s strategy.
It should be noted that the LTIs are reported at fair value on the reporting date according to accounting standards. The actual amount realised can be much larger (or smaller) depending on the company’s performance and when Van Dijk decides to exercise his options.