More should heed foresight of Bekker

IF you think Jacob Zuma has had a hard few weeks, consider Koos Bekker, the outgoing CEO of media giant Naspers, whose personal fortune has shed R3.2-billion within a few weeks.

Even more sobering is the fact that losing a billion or two here or there probably will not concern Bekker overly. This is because, as is commonly recounted in hushed tones in business schools, Bekker is so “brave” and endowed with such exceptional “foresight” that he opts to forego a salary entirely, and just takes Naspers shares instead. Well, sure. At one stage anyway. But what this account does not reveal is that Bekker now owns a chunky 16.3 million shares in Naspers, a stake worth a jaw-dropping R22.1-billion by March 11.

But in the past two weeks, Naspers’s share price has dipped more than 14%, which in turn means that Bekker’s stock is now worth “only” R18.9-billion.

The reason for Bekker’s fortune shedding a few billion rand is because the value of Tencent — the roaring Chinese internet company of which Naspers owns 34% — dropped on the Hong Kong Stock Exchange after it unveiled profits that fell short of expectations.

Tencent is nothing less than an Asian investment phenomenon, and it would be churlish to begrudge Naspers or Bekker for having had the vision to climb on board the Tencent express back in 2001 before it left the station.

Just to provide some perspective, Tencent runs the most popular online app in China, it controls the ludicrously popular mobile chat service WeChat as well as instant messenger service QQ, which has more than 800 million active users every month. That means QQ’s monthly users are 16 times South Africa’s entire population.

So even though Tencent’s shares took a knock in Hong Kong in recent days, this does not take the gloss off the fact that Tencent has been the best-performing share on the Hong Kong exchange since it listed in 2004, three years after Naspers first invested.

The cold numbers say it best: Tencent listed at HK$3.70 a share, and has since climbed 150-fold to about HK$558 a share today.

Whether you believe it is blind luck or the sort of acute vision that builds lofty reputations, it is clear that Bekker could now afford to buy the odd island, cover it from tip to tip with Persian carpets and still never have to work again.

So just how “risky” is his decision not to take a salary, and rather opt for Naspers shares? Not very, you would think. Actually, what is far more surprising is that more CEOs have not followed his example. Of course, you can’t force a young boss at the start of his career to do that, but South Africa has no shortage of corporate top brass who won’t want for money for the rest of their lives.

One CEO told me recently that once you have a certain amount of cash in the bank— and granted, he had a few hundred million stashed away — the salary you are paid becomes relatively meaningless.

This comes as some people are rethinking salaries and incentives.

Ketso Gordhan, the man at the helm of cement company PPC, told this newspaper he approached his top 60 managers and asked them to forego an increase and divert that cash to the lowest-paid workers.

Gordhan went a step further, and cut his own salary 15% from last October. What this meant, he said, was that 1 200 of PPC’s lowest-paid workers got an extra R10 000 a year, above their usual increase.

“When I started, my salary was 120 times [that of] the lowest earner, and just by cutting mine and increasing theirs, we got it to one to 48, and we will get it to one to 40,” Gordhan says.

Others are taking an unconventional approach too. Jannie Mouton, the chairman of PSG, said recently that he told his remuneration committee to divert any increase he would get to charity.

It’s tricky. Capitalism is built on incentives and for many people, a few extra million can soothe a fragile ego and extract the sting from the late nights. There’s also the undeniable fact that few companies will ever have the sort of success as Naspers — so the last thing you want to do is bankrupt your CEO by forcing him to take shares.

Not everyone can be as smart or lucky as Bekker. But after the kudos heaped on him for being so “brave” and the immense rewards he has got, you would think a few more people would not be averse to swapping their salary for stock.