Naspers CEO Bob van Dijk. Picture: Masi Losi/Sunday Times
Naspers CEO Bob van Dijk. Picture: Masi Losi/Sunday Times

Based on AGM votes, Naspers CEO Bob van Dijk’s remuneration is what you might call a grudge purchase for the majority of N shareholders.

In 2018 just 43% of N shareholders voted in favour of Naspers’s remuneration policy, way short of the average level of backing for most JSE-listed executives. But this dismal showing was a considerable improvement on 2017, when just 24.1% backed the remuneration policy.

Shareholders might want to see more than a $2m trading profit in just one of the group’s divisions before they embrace generous payments to the top executives. It was encouraging to see Naspers’s classifieds division turn a 2018 $114m trading loss into a $2m trading profit in 2019, but all the other divisions are still in negative territory.

So it might be a little early for the remuneration committee to ask shareholders to approve a 30% hike in the value of Van Dijk’s long-term incentives to $13.65m (the AGM is set for August 23). Of course, with the high-voting A shares in the bag the committee doesn’t really have to worry about how the N shareholders vote.

Bob van Dijk: its Third long-term incentive is essentially a done deal
Bob van Dijk: its Third long-term incentive is essentially a done deal

N shares have one vote per share and are listed on the JSE. Unlisted A shares have 1,000 votes per share but insignificant economic participation.

This means the plan to introduce a third long-term incentive for Van Dijk and his top colleagues is essentially a done deal. The new performance share unit incentive "allows us to further strengthen our pay-for-performance approach and create an even stronger alignment between shareholder outcomes and executive pay", says the remuneration committee with apparently no sense of irony.

The reality is that for the past several years and for the foreseeable future there has been no (and will be little) alignment between executive pay and "shareholder outcomes". The Naspers share price is all about Tencent.

This means shareholders are likely to reverse their support for the remuneration policy this year. Yes, shareholders were concerned there was no link between performance and pay, but they were hoping the existing incentives would be tweaked to create that link — not that a whole new incentive, worth a possible $6m in 2020 alone, would be added. Making matters worse is the lack of clarity on what the performance hurdles actually involve.

Asief Mohamed of Aeon Investment Management welcomes the improved disclosure in this year’s remuneration report but is concerned about the ease with which the two executive directors can achieve whatever targets are set.

"And, as usual, the amounts involved are excessive," says Mohamed.