An event to remember
Naspers chair shuts down shareholder activist at AGM, writes Ann Crotty
As AGMs go, it was an unusual affair. As Naspers AGMs go, it was an extreme affair, with shareholder activist Theo Botha coming close to interrogating the super-sensitive and super-valuable issue of share incentive trusts.
In a controversial move that might be a contravention of the Companies Act, chairman Koos Bekker shut down questioning before Botha could ask for an explanation of proposed amendments to the three trusts, including transferring the domicile of one from Mauritius to Dubai.
Since Naspers listed in 1994, its AGMs have been tightly choreographed events designed to ensure no room for surprise. Even after Naspers hit the big time with its Tencent investment, the AGM remained remarkably grey and predictable. For the past 10 years, it has continued to be an event dominated by white males in suits who come to give thanks to the board. It has reeked of unquestioning gratitude.
The comfortable, symbiotic relationship has suited the fund managers and the board — appropriately so, given that the company has been the largest source of passive wealth creation in this country.
But then shareholder activist Botha bought a share. In 2016 he destroyed all attempts to keep the meeting flowing along the lines of the prepared agenda. Botha had come to do what he does best: actively and openly engage with the board for the benefit of the millions of pensioners and workers whose fund managers don’t bother.
To this end Botha has done more to shake up the dangerously cosy relationship between company boards and fund managers than any other individual, institution or code involved on the JSE. For those on the receiving end it is an intensely uncomfortable experience, made all the more galling by the fact that Botha comes extremely well prepared and usually with just one share.
To date, Remgro’s Johann Rupert has been the only top corporate executive to emerge from the experience with his reputation enhanced. Though initially taken aback, Rupert quickly got into the swing of things. Far from being defensive, he used Botha’s attendance at Remgro AGMs to demonstrate his grasp of governance issues as well as local and global investment conditions. In this case, everyone benefited a little from Botha’s involvement.
Rupert was the exception; most CEOs and chairmen buckle from the unusual experience of being challenged.
Naspers chairman Bekker buckled big time. At the 2016 AGM he threatened to have Botha thrown out of the meeting if he persisted in questioning why he was not allowed access to documents he was entitled to under the company’s memorandum of incorporation.
As Botha persisted, the mood of the AGM grew darker — so dark that, in a remarkable demonstration of intolerance for nonchoreographed contributions, long-serving director Boet van Zyl staged a walkout and invited other shareholders to join him. None did.
Botha failed to get access to the documents at the AGM, but he promptly followed up with a lawyer’s letter. “It is an offence for a company to fail to accommodate any reasonable request for access, or to unreasonably refuse access, to any record that a person has a right to inspect,” said Botha’s lawyer.
Botha eventually got what he had been looking for: access to Naspers’s share incentive trust deeds.
As the name suggests, the details of these trusts explain Naspers management incentives. At stake is access to potentially enormously valuable Naspers shares. Given the considerable discretionary powers involved, the trustees are essentially able to decide who among Naspers’s employees will become millionaires. Botha believes these documents, more than anything else, explain how Naspers functions.
So, fast-forward to the August 2017 AGM. Back comes Botha with his Naspers share. The setting for the event has changed — a larger room is needed to accommodate the greater numbers of shareholders and media likely to attend
Botha eventually got what he had been looking for: access to Naspers’s share incentive trust deeds
the expected showdown.
It’s quickly evident that Bekker is way out of his comfort zone. This is a meeting that is unlikely to go according to the carefully prepared agenda. Remarkably, a copy of that agenda is placed on every seat, giving all in attendance an opportunity to see just how choreographed the event is.
After some insightful views on Naspers’s position vis-à-vis the global technology industry, Bekker makes some jaw-dropping comments on corporate governance: essentially, good governance is a nice-to-have add-on, but don’t let it distract you from running the company.
Then comes a defence of Naspers’s decision not to sell Tencent, despite growing concerns about the approximate R400bn value-trap expressed by financially illiterate people, according to Bekker. (This seems like a blindingly good decision to have made, though it is worth pointing out that no shareholder has actually called for a sale of Tencent; some have suggested shares in the hugely successful Chinese IT company be unbundled to Naspers shareholders.)
Eventually it is time for questions and comments from shareholders. Until 2016 this part of the AGM was done and dusted in about seven minutes. But, in a bid to prevent a repeat of the 2016 meeting, Bekker says questions will be taken in lots of three and allocated to the most knowledgeable person in the room. There’s little doubt that this is designed to dilute the shatteringly intense effect of Botha, and for a while it seems to work. It is difficult to focus on Botha’s questions about key performance indicators and plans to turn the core Naspers businesses to account when they’re interspersed with questions about DStv’s sports channels and blockchain technology. But Botha is nothing if not dogged — and because AGMs are the equivalent of his natural habitat, he cannot be rattled at them.
At 12.30 pm, just as it seems Botha is getting into his stride and leading up to the resolution dealing with the proposed amendments to the share incentive trusts, Bekker rules that there will be no more questions. His move is remarkable, as it seems even he has gone off-script — the agenda has him asking shareholders if they have any questions on the resolutions. Botha’s protests fall on deaf ears.
We may not have heard the last of the matter. Botha rarely takes no for an answer. The only thing at issue is whether or not he will wait until August 2018 to get answers to the questions he wasn’t allowed to ask this year.
Theo Botha … No answer on proposed amendments to Naspers’s share incentive trusts
Naspers chairman Koos Bekker Picture: TREVOR SAMSON