Ann Crotty Writer-at-large

Naspers has won institutional support for its considerably improved 2018 remuneration report but is heading for another stormy annual general meeting (AGM) as shareholders demand an explanation for the R1.6bn collected by CEO Bob van Dyk during the year.

Asief Mohamed, chief investment officer at Aeon Investment, said the just-released report was a significant improvement in terms of disclosure and aligning executive pay with shareholder interests.

"But the quantum being paid out is obscene and probably puts Van Dyk amongst the richest 1 percent on our planet."

Mohamed believes further improvements are needed to ensure the top executives are not getting an easy ride on the back of the Naspers share price performance.

A platform that could be used to call on global institutions to vote against Naspers’s remuneration policy, says Mohamed, is the UN-backed governance investor network, Principles for Responsible Investment, which plays an activist role in promoting good governance.

The latest report does little to dispel the worry that Van Dyk and his executive colleagues are securing huge payouts because of the stellar performance of the Naspers share price, which is driven by the 31% investment in Tencent — over which Naspers executives have no influence.

Almost R1bn of the R1.6bn Van Dyk picked up during 2018 was the payout on 284,031 Naspers N shares that had been allocated to him in 2014 when he was appointed CEO.

In addition, Van Dyk cashed in R619.6m in share appreciation rights during 2018. The value of the share appreciation rights is based on an assumed value of Naspers’s e-commerce businesses, which exclude Tencent and MultiChoice. Most of the e-commerce businesses are making little or no profit.

New members

Robert Lewenson, head of environment, social and governance engagement at Old Mutual Investment Group, said on first read they were pleased to see Naspers had taken their comments into consideration.

"We see a revised remuneration committee with Craig Enenstein as the new chair, as well as new members with more of an IT background and diverse skill set. We also note the introduction of clawback and minimum shareholding requirements, which is in accordance with global best practice."

He also welcomed the increased level of disclosure, but stopped short of endorsement. "We will evaluate the policy and report in more detail as we get nearer to the AGM to ensure the relevant remuneration outcomes are effectively linked to company performance and engage the company further if necessary."

Mohamed said he would like assurance that the Naspers board would not abuse the high-voting Naspers A shares again at the upcoming AGM.

"At the 2016 and 2017 AGMs they were used to boost the apparent extent of support for the remuneration policy," said Mohamed. He said chairman Koos Bekker had previously indicated that the high-voting shares would only be used for control purposes.

The 907,000 Naspers A shares, which are controlled by Bekker, long-term director Cobus Stofberg and Sanlam, each have voting rights equivalent to 1,000 N shares, giving them control of 68% of Naspers’s votes. Listed N shares control just 32% of the votes.

By using the A shares the board was able to secure the critical 75% backing for the policy at the 2017 AGM, although about 70% of N shareholders opposed it.