Naspers Investor Allan Gray to Oppose Executive Pay PolicyBy
Shareholder says policy isn’t in line with investor interests
Executives should be judged on operations outside Tencent
Naspers Ltd. shareholder Allan Gray Ltd. plans to vote against the remuneration policy of Africa’s biggest company because it isn’t aligned to the performance of the media and internet business outside a stake in Chinese giant Tencent Holdings Ltd.
Naspers paid Chief Executive Officer Bob van Dijk $2.2 million in the year through March, an increase of 32 percent, and awarded him $10.4 million in long-term share options. That corresponded with a period in which the Cape Town-based company reported a trading profit of $2.75 billion -- or a loss of $379 million when Tencent is stripped out.
The pay plan “is not aligned with shareholders’ interests, the disclosure is poor, and the performance targets appear to be very easy to achieve,” Pieter Koornhof, investment analyst at Allan Gray, said in emailed comments. “On top of that, they are now also proposing to shorten the vesting periods for the long-term incentives.”
Allan Gray owns about 2.3 percent of Naspers stock. Its objections were first reported by Business Day newspaper. The Public Investment Corp., Africa’s largest money manager, is the largest shareholder with an 13 percent stake, according to data compiled by Bloomberg.
‘Fit For Purpose’
Naspers’s board believes its remuneration policy and practice are “fit for purpose and compare well to those of many of our global peers,” Van Dijk said in an emailed response to questions. “While we have increased our disclosure this year compared to previous years based on earlier shareholder feedback, there is always room for further improvement, which the remuneration committee will carefully consider before the publication of our next integrated report.”
Naspers hit the jackpot when a 2001 investment in then-unknown Tencent grew into a 33 percent stake in the WeChat creator worth about $131 billion. The stake is, however, now worth more than Naspers’s market capitalization, putting pressure on the company to get more out of a portfolio of other businesses that range from education software in the U.S. to pay-TV in sub-Saharan Africa.
Allan Gray, also based in Cape Town, is earning a reputation for agitating for change at South African listed companies after successfully pushing for a boardroom shake-up at engineering firm Group Five Ltd. The money manager has also spoken out against the running of welfare-payment provider Net1 UEPS Technologies Inc.
“Most of the executive remuneration is based on Naspers including Tencent and very little is based on the performance of the rump -- i.e. Naspers excluding Tencent,” Koornhof said. “As a result you have a situation where the rump -- which executives have control over -- performs poorly, but executives continue to receive large payouts because Tencent -- which executives don’t control -- is performing well.”
Naspers shares rose 1.1 percent to 2,930 rand as of 9:14 a.m. in Johannesburg, valuing the company at 1.29 trillion rand ($100 billion). The stock is up 46 percent this year, the best performer on the FTSE/JSE Africa Top40 Index.