Rich rewards

Former Naspers finance director Steve Pacak reaped the rewards of his long service to the company when he sold R52.8m worth of stock this week.

Pacak was awarded 24,000 shares, as part of his performance incentive, in 2007.

This, however, is just a drop in the ocean.

Pacak still has a whole lot more left in his portfolio.

From that R175/share incentive almost 10 years ago, Pacak waited long enough to sell at the current R2,200, giving him a gross profit of R10.8m, which will be subject to taxation.

Pacak, who has been with the company since 1988, owned 1m Naspers shares at the end of March last year. Those were worth R2.3bn at the time of writing, with Naspers trading above R2,260/share.

The growth of Pacak’s portfolio has turned the now nonexecutive director, along with some of his colleagues and the company’s investors, into billionaires. They have been riding the wave of China’s state-led economic growth.

Naspers’s biggest asset is the 34% it owns in China’s Tencent Holdings, the owner of the WeChat social media and e-commerce operation.

The Chinese have not been left behind by the growing power of their economy — now the world’s second-largest.

This week China’s National Bureau of Statistics reported a 6.7% year-on-year GDP expansion in the second quarter.

Though that rate of growth is pedestrian by China’s standards, and whether or not you believe its government’s statistics, it is six times the 1.1%/year growth reported by the US in June.

If the economy of China maintains this rate of growth, it will probably overtake the US economy to be the world’s largest within the next 20 years.

Along with China’s fortunes, Naspers’s value seemed to be heading in one direction only, which cannot be said of many counters on the JSE. Back to directors’ dealings. Phil Roux, CEO of the Pioneer Foods Group, may wish that he was in Pacak’s position.

Roux had to spend some of his own money to protect his investment in the company, in a hedging transaction in which he seeks to protect the value of his stock against the vagaries of the market.

Roux placed a hedge on 206,500 Pioneer Foods shares, with a put strike of R167.10 and a call strike at R190/share.

This hedge will be in place until the end of February next year, when he hopes to take delivery of the share options on which he placed the bet.

Says Roux: “None of these securities has vested yet.

“It is a beneficial trade which is merely personal to limit risk at the time when I exercise the options.”

Roux may be at least a little justified in wanting to limit the downside to his investment.

Between October last year and February, the share price of Pioneer Foods, the producer of White Star maize meal and Bokomo cereals, dropped 36%.

Only now does it seem to be on the mend, trading at R181 at the time of writing.

While Roux was concerned about protecting the value of his investment, David Kneale of Clicks disposed of 75,000 shares in the operator of pharmacies, beauty products and other goods.

Kneale says he needed the R9m proceeds of the sale to diversify his personal portfolio away from the group.

The stock has jumped 37% so far this year.

Perhaps it is, indeed, time to take your profits. After all, who would know the company better than the CEO?