The dealings table this week is littered with company executives reaping rewards from incentive plans. But none seems as extravagant as that of Shoprite’s front man. And nobody is less eager to show what they pay their most junior staffers, even those who came into business with a promise to bring a worker-friendly face.
Hosken Consolidated Investments (HCI) CE and co-founder Johnny Copelyn was granted 123,956 shares, which he accepted at an option strike price of R117.03. Vesting in September 2019, the total value of the transaction is R14.5m.
Copelyn’s colleagues, finance director Kevin Govender and executive director Yunus Shaik, also received similar offers. Theirs were respectively valued at R9.2m and just over R979,000.
The stock was offered to the executives at a 10% discount on the share’s volume weighted average trading price over the previous 20 days.
Last year Copelyn and his colleagues received similar benefits. Maturing in September 2018, the total incentive performance stock awarded was valued at R15m.
These are part of the annual incentive retention awards to the executives. Under this scheme, over 600,000 more HCI shares are due to be delivered to Copelyn in the years to September 2018.
These are worth R78m at the current price.
In addition, the annual report shows Copelyn was paid a total R13.2m for the year ending March 2016, including a R2.8m bonus and a R3.5m gain from share options. Govender and Shaik each took home almost R6m.
At fashion house AVI, David Hood, the director of subsidiary National Brands, exercised his options on 67,408 shares granted to him in April 2013. Hood then sold these shares at an average price of R93.59, clearing a gross profit of R3m. Last year, Hood was granted 74,349 shares at a price of R84.45, vesting in three years. A brief look at Hood’s transaction shows he has been a net seller of AVI shares.
All these, however, pale in comparison to Whitey Basson’s pay package. The long-serving Shoprite chief executive was paid a whopping one-off R50m discretionary bonus for the year ended June. This generous bonus was made available to him as part of the group’s short-term incentive plan.
Basson got his plump cheque for surpassing the growth targets for trading profit in the 2016 financial year, says Shoprite in the annual report. And because he had not received a pay increase since 2013, Basson has also not received any short-term incentive payments, nor has he received benefits from any long-term incentive plans in the past five years, the company says. Shoprite also spoke glowingly of how Basson has transformed the group into a major player since he took the leadership role way back in 1979. A R50m paycheck was therefore justified for 45 years of service, the retailer says.
The trading profit jumped 15% to R7.3bn. Net profit rose 17.2% to R4.8bn.
This kind of performance allowed Shoprite to open 103 new stores during the year, taking its total to over 2,200. Another 131 stores are set to be opened by June next year.
These created much needed jobs — in the tens of thousands — in the many depressed markets in which Shoprite operates. But it would have been a worthwhile exercise for the company to show what it pays its lowest-paid employees.
This would raise awareness about and help jolt society into confronting the inequality SA is known for. But then again, is that the job of business leaders?