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Cape Town – Naspers shareholders on Friday voted in favour of its remuneration policy at its annual general meeting in Cape Town on Friday.
This comes after investor Allan Gray said it would vote against the policy, pointing to an over-reliance on Naspers' 34% stake in Tencent.
Naspers made the announcement after shareholders voted on 34 resolutions, which included the remuneration policy. Naspers was trading 0.16% higher on the JSE at R3 022 at 17:00 on Friday.
Regarding resolution 7, to endorse the remuneration policy, 79% of the shareholders voted in favour of the policy, while almost 18.5% voted against the policy. Roughly 2.5% abstained.
Allan Gray, which has a 2.3% stake in Naspers, said its chief executive Bob van Dijk’s remuneration wasn’t aligned to the performance of the business outside Tencent.
Van Dijk was paid $2.2m (R28.96m) in the year to March 2017, an increase of 32%, and was awarded $10.4m (R137m) in long-term share options.
“That corresponded to a period in which Naspers reported a trading profit of $2.75bn - or a loss of $379m when Tencent is stripped out,” Melanie De Nysschen, corporate finance principal at Bravura, said in a statement on Friday.
Pieter Koornhof, investment analyst at Allan Gray, said Naspers’ remuneration policy “is not aligned with shareholders’ interests, the disclosure is poor, and the performance targets appear to be very easy to achieve. On top of that, they are now also proposing to shorten the vesting periods for the long-term incentives.”
However, Naspers chairperson Koos Bekker told shareholders on Friday that judging the firm between profitable and unprofitable segments was an “illiterate” viewpoint. “There is no correlation between short-term profitability and market value in our industry,” he said.
Naspers chief financial officer Basil Sgourdos added that the intrinsic value Tencent added was continuously being evaluated. “They (Tencent) think long-term like we do,” he said, adding that Naspers sees Tencent unlocking tremendous value going forward.
WATCH: Interview with Naspers CEO Bob van Dijk on Friday
Rachel Jafta, chairperson the human resources and remuneration committee at Naspers, said that Van Dijk’s performance was mostly measured by non-Tencent performance within the company.
She said that 50% of short-term incentive was based on financial performance targets, while others include strategic targets that she could not share as these targets included sensitive information.
However, shareholder activist Theo Botha – who focused his questions on the remuneration policy – wanted to know what these targets were. In response, Jafta said the committee would improve the transparency of how it communicates the policy in the next financial year.
Jafta’s commitment comes as certain King IV requirements have been included in the JSE listings requirements and become mandatory for listed entities, explained De Nysschen. “The revised listings requirements require full disclosure of the remuneration policy and implementation report in the annual report,” she said.
“Whilst Naspers will only be required to formally engage with dissenting shareholders such as Allan Gray (and then only in the event of 25% or more of Naspers’ shareholders voting against its remuneration policy) with effect from its next AGM, the company would be well advised to hear Allan Gray and others out on their concerns.
“Even more so given Naspers’ confirmation in its 2017 human resources and remuneration committee report that it is ‘aware of the incoming remuneration reporting requirements under King IV and has endeavoured to improve remuneration disclosure this year, in anticipation of applying the recommendations, as appropriate, of King IV in 2018’.”
* Fin24 is owned by Media24, a part of Naspers.
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