Naspers overhauls executive remuneration policy
Global Internet group and technology investor Naspers has introduced a clawback clause on short- and long-term incentives for the CEO and his executive team, as well as a minimum shareholding requirement for the CEO of 10 times his annual salary.
The clawback provision is a contractual clause typically included in a company’s employment contracts, where money already paid to an employee must be paid back to the employer under certain conditions.
The Naspers’ clawback provision will apply to the short-term investment plans of CEO Bob van Dijk and his executive team, including CFO Basil Sgourdos.
The clawback provision will operate for two years following the payment of any short-term or long-term investments and will give the remuneration committee the ability to claw back all or part of the incentive paid in a particular financial year.
This clause will take effect in the event of material financial misstatement or gross misconduct on the part of the individual.
The Naspers CEO, who joined the group in 2014, will be measured on revenue growth for the group.
Naspers’ human resources and remuneration committee, led by Craig Enenstein, says the company has also implemented a new policy to buy shares on the market to offset shareholder dilution from new Naspers share options issued and share appreciation rights schemes settled in Naspers shares.
For the financial year ending 2020, the company will introduce performance share units to go along with long-term investments for senior executives.
“Shares awarded under this plan will vest in full after three years, subject to the participant’s ongoing employment and the performance condition being met.”
Enenstein says in the integrated report: “Our remuneration philosophy underpins our group’s strategy and enables us to achieve our business objectives. Our commitment to pay for performance and alignment with shareholder value creation drives all our remuneration activities and supports the ownership mentality and spirit of entrepreneurship in our teams around the world. We believe in a level playing field for our people.”
Enenstein continues: “We strive to pay fairly and responsibly and, as much as possible, the structure of our pay is similar, regardless of the seniority of the employee. In the committee’s view, the remuneration policy achieved its stated objectives in the year under review. We endeavour at all times to balance the need to compete globally for the very best talent with the need to pay fairly and responsibly.”
The Naspers annual report says Van Dijk collected a paycheque of almost R1.9 billion ($1.26 million) in salary, incentives, vested share options and share appreciation rights in the year to March 2019.
In the same year, he received the equivalent of about R180 million in base pay, pension and incentives in the 2019 financial year.
Also in the same period, he received a pay rise of 10%, which the company says was motivated by a strong performance, as well as the listing and unbundling of pay-TV service MultiChoice, and the offloading of Flipkart to Walmart.
The global company adds: “We have amended the design of executive remuneration for the forthcoming 2020 financial year. When making executive awards, the committee has considered the need to maximise shareholder value.”
Naspers adds: “This year we introduced clawback provisions on the short-term and long-term incentives for the CEO and his direct reports. In the 2019 financial year, these clawback provisions were not invoked. We also introduced a shareholding requirement for the CEO, whereby he must hold 10 times his base salary in Naspers shares at all times.”
This was effective from 31 March 2019, and Van Dijk has already met this requirement.
Naspers also confirmed that its long-awaited intention to list its international Internet assets, in a company called Prosus, on the Euronext Amsterdam Stock Exchange in the Netherlands, will happen this September.
The South African company had initially planned for a 17 July listing. Naspers is expected to own no less than 73% of Prosus.