Profit at the checkout
Summers smooths exit from Pick 'n Pay
PICK ’N PAY CEO Sean Summers was seen to be smoothing his way out of the retail giant last week ahead of his official departure date at the end of this month.
Summers sold R22m worth of stock in both Pick ’n Pay stores and the pyramid holding company, Pick ’n Pay Holdings, which is controlled by the Ackerman family. Summers could hardly have timed his exit better, with both shares trading near record highs boosted by an economic boom of gargantuan proportions over the past five years.
Although when he announced his departure last August Summers said he would keep the bulk of his assets invested in the group, it’s interesting to note that he sold out of the holding company lock, stock and barrel. The shares were purchased by the Ackerman family, no doubt keen to maintain its grip on the group.
According to Pick ’n Pay’s annual report for 2006, Summers still owns just over 2,5m shares in the operating company (Pick ’n Pay Stores) after this sale, worth R87,3m.
He also has 2,5m outstanding share options in the company’s general share scheme, and another 2,6m in the executive share scheme. The profit on these outstanding options is around R130m.
The problem is that most of these options only mature after his official departure date. The company has to date given no indication of how it intends dealing with this awkward fact. And, of course, once Summers has left the company and is no longer a director, the company won’t be obliged to disclose any dealings with him.
Perhaps we can persuade one of the fund managers with some activist credentials, like Allan Gray or Coronation, to raise the issue at the company’s next AGM and not to let go until it has an answer.
At Mr Price, joint chairman Laurie Chiappini was also seen offloading a large portion of his holding in the fashion retail group. The R14,5m worth of shares sold represented around 40% of Chiappini’s holding in the ordinary share capital of Mr Price.
Both Chiappini and fellow joint chairman Stuart Cohen have liquidated a large portion of their holdings in the past two years. Despite their tiny economic interest in the group, they maintain control of the business through high-voting “B” ordinary shares that carry 12 votes for every share.
Although Chiappini and Cohen are listed as non-executive directors, they still draw salaries from the group, which amounted to around R4,8m each in the last financial year.
Finally, we have to spare a mention for Simmer & Jack Mines’ CEO Gordon Miller and director John Berry, who made a roaring profit on options.
But in the Sens announcement, the company notes that the directors sold the shares “in order to exercise options” in Simmers and subsidiary First Uranium Corporation. Oh please. Why try and spin the blatantly obvious fact that they sold the bulk of the shares because they were making a very tidy profit out of it? They only needed to sell a fraction of the shares to exercise the options.