Naspers chief executive, Koos Bekker, R7bn richer

Naspers chief executive Koos Bekker’s remuneration package, which is currently valued at more than R7-billion before tax for the past five years, has broken all previous pay records for JSE executives and is expected to hold the record for the foreseeable future.

Koos Bekker: Naspers Chief Executive

The 74 percent surge in the Naspers N share price over the past 12 months, combined with Bekker’s unique remuneration arrangement, has generated several billions of rands of potential profits for Bekker.

At a current price of R795, the 11.7 million shares that Bekker was awarded as remuneration for the five years to the end of March are worth R9.3bn. The cost to Bekker of the shares is just over R2bn.

This puts the value of his remuneration package significantly ahead of any other executive on the JSE, including executives of companies that have their primary listing on an international bourse.

Naspers’s annual report for financial 2013 reveals that 3.9 million shares were released to Bekker on March 31 this year and are being held in reserve for him in the company’s share incentive scheme. “This is the final tranche of his five-year contract entered into on April 1, 2008,” the Naspers remuneration report says.

In terms of his unique remuneration contract Bekker does not receive any salary, bonus, car scheme or medical or pension contributions from the company. Instead, in 2008 he was awarded 11.7 million shares, which vested in three annual tranches of 3.9 million at the end of years three, four and five.

The 11.7 million shares were awarded to Bekker at the ruling price at the beginning of his five-year contract, which was around R150. In addition, the price he has to pay is adjusted for inflation.

The first tranche, which was paid out at the end of financial 2011, cost Bekker R167 a share. The second tranche, at the end of financial 2012, cost Bekker R176 a share. The shares allocated to Bekker in March this year cost him R185 each.

This means that the total cost to Bekker for the 11.7 million shares was just over R2bn, compared with the current market value of those shares of R9.3bn. So, Bekker is currently showing a pretax profit of R7.2bn on his unique five-year remuneration package.

This is Bekker’s third five-year contract with Naspers.

In terms of the first contract, entered into in 1997, Bekker was allocated 3.3 million shares, which were released to him in three tranches ending in December 2003.

The dotcom collapse in 2001 highlighted the high-risk element of the arrangement and there was little value in the Naspers shares by the time they were awarded to Bekker.

In the second five-year contract, Bekker was allocated 4.4 million shares in 2003 at R21.40 a share. The shares were again released to Bekker in three tranches, with the price adjusted for inflation.

The steady upward trajectory of the share price during this five-year period meant that Bekker secured considerable profits.

The third contract, which has just expired, is by far the most valuable in terms of the number of shares awarded as well as the price appreciation.

The single most important factor in the surge in the Naspers share price in recent years is attributed to the performance of, and expectations for, China-based Tencent. Tencent is an acquisition that Bekker, who is regarded as having more guanxi (contacts) in China than most foreigners, championed back in 2004.

In addition to the 11.7 million shares, Bekker holds 4.7 million shares awarded to him in 2002 in terms of the rules of the Naspers share incentive trust. At the current share price, these 16.4 million shares are worth R13bn. The dividend payment on these shares will earn Bekker, and cost Naspers, R63 million a year.

Bekker appears to have sold the 7.7 million Naspers shares he was allocated in terms of the first two five-year contracts.

Supporters of Bekker’s remuneration contract argue that it is an appropriate arrangement given the critical entrepreneurial role he has played in building up the company.

Critics counter that the arrangement is unnecessarily generous and has contributed to the high-risk aspect of the share price.

The annual report does not indicate that Bekker has to hold onto the shares beyond the end of his five-year contract. They point to the fact that Naspers has a higher market capitalisation than Sasol, although its earnings-generating ability is significantly lower.

Remuneration consultants note that the arrangement has essentially de-linked Bekker from the group’s remuneration policies as set out by the remuneration committee. – IOL

Koos Bekker R7bn richer in 5 short years

BRICS – For those who don’t know what it is

BRICS, originally “BRIC” before the inclusion of South Africa in 2010, is the title of an association of emerging national economies: Brazil, Russia, India, China and South Africa. With the possible exception of Russia, the BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs. As of 2013, the five BRICS countries represent almost 3 billion people, with a combined nominal GDP of US$14.8 trillion, and an estimated US$4 trillion in combined foreign reserves. Presently, South Africa holds the chair of the BRICS group.

In 2012, Hu Jintao, who at the time was President of China, described the BRICS countries as defenders and promoters of developing countries and a force for world peace. However, some analysts have highlighted potential divisions and weaknesses in the grouping, such as India and China’s disagreements over territorial issues, slowing economic growth rates, and disputes between the members over UN Security Council reform. India’s foreign policy in regards to BRICS is also heavily criticized by analysts in USINPAC.

History

The foreign ministers of the initial four BRIC states (Brazil, Russia, India, and China) met in New York City in September 2006, beginning a series of high-level meetings. A full-scale diplomatic meeting was held in Yekaterinburg, Russia, on May 16, 2008.

First BRIC summit

The BRIC grouping’s first formal summit commenced in Yekaterinburg on June 16, 2009, with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India and China, all attending. The summit’s focus was on means of improving the global economic situation and reforming financial institutions, and discussed how the four countries could better co-operate in the future. There was further discussion of ways that developing countries, such as the BRIC members, could become more involved in global affairs.

In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be ‘diversified, stable and predictable’. Although the statement that was released did not directly criticise the perceived ‘dominance’ of the US dollar – something that Russia had criticised in the past – it did spark a fall in the value of the dollar against other major currencies.

Entry of South Africa

In 2010, South Africa began efforts to join the BRIC grouping, and the process for its formal admission began in August of that year. South Africa officially became a member nation on December 24, 2010, after being formally invited by the BRIC countries to join the group. The group was renamed BRICS – with the “S” standing for South Africa – to reflect the group’s expanded membership. In April 2011, the President of South Africa, Jacob Zuma, attended the 2011 BRICS summit in Sanya, China, as a full member.

Developments

The BRICS Forum, an independent international organisation encouraging commercial, political and cultural cooperation between the BRICS nations, was formed in 2011. In June 2012, the BRICS nations pledged $75 billion to boost the lending power of the International Monetary Fund (IMF). However, this loan was conditional on IMF voting reforms. In late March 2013, during the fifth BRICS summit in Durban, South Africa, the member countries agreed to create a global financial institution which would rival the western-dominated IMF.

Summits

The grouping has held annual summits since 2009, with member countries taking turns to host. Prior to South Africa’s admission, two BRIC summits were held, in 2009 and 2010. The first five-member BRICS summit was held in 2011. The most recent BRICS summit took place in Durban, South Africa, in March 2013.

Member countries

BRICS

New Dimensions in Agricultural Extension Management

I am honored to join you today to help launch the first U.S-India-Africa triangular training program on “New Dimensions in Agricultural Extension Management.” It is a true privilege to celebrate our new collaboration with the prestigious National Institute of Agricultural Extension Management (MANAGE). The occasion marks an important moment in the long history of food security collaboration between the United States and India. This event represents another important step in our ever broadening strategic partnership on global food security and nutrition.

English: Map of the world showing the location of India and the United States of America. (Photo credit: Wikipedia)

For more than half a century, scientists, engineers, and social innovators from India and the United States have worked side-by-side to address critical development challenges in food production, health, education, and energy. The best-known outcome of our collaboration is the “Green Revolution,” which swept across India and Southeast Asia between the 1940s and late 1970s. Together, India and the United States improved agricultural technologies, agricultural education, and agricultural research capacities and saved millions of lives here and around the world. I can think of few such powerful success stories in the history of development cooperation.

The Green Revolution relied upon a shared vision and shared goals. Food-deficient nations became more food secure after India and the United States worked together to sustain international collaborative engagements, increase investment in science and technology, and scale-up research breakthroughs. As the quality and quantity of food have significantly improved, hunger has declined. As farmers’ incomes have increased, women, children, and the most vulnerable have better access to the food necessary for their survival, and they can also invest in their children’s education. Targeted investments in food and nutrition security have helped bring millions out of poverty and hunger, and agriculture continues to be a key driver of growth and development today.

Now, India and the United States have another critical opportunity to work together. Despite the progress made since the Green Revolution, 870 million people still go to bed hungry every day, most of whom live in developing countries in Africa and Asia. Women, children, and the most vulnerable members of society are still the most adversely affected by hunger and poverty. Climate change is a growing global challenge, as are the related issues of shrinking natural resources, a decline in per capita cultivable land, and rising demands for food. Global partnerships, investments in research, and “game-changing” innovative solutions are needed to address these and similar challenges. Our joint collaboration over the last fifty years proves that solutions to address hunger and undernutrition are not beyond our reach.

The time to focus on food security and nutrition is now.

In the words of President Obama, “History teaches us that one of the most effective ways to pull people and entire nations out of poverty is to invest in their agriculture.” At the L’Aquila G8 Summit in 2009, President Obama focused the world’s attention to revive global investment in agricultural development to reduce global poverty. Stemming from that 2009 pledge, Feed the Future, the U.S. government’s global hunger and food security initiative, represents our contribution to the global commitment to address food and nutrition security and re-defines the way we work to address those issues around the world today. Feed the Future efforts are driven by country-led priorities and rooted in partnership with donor organizations, the private sector, and civil society to enable long-term success.

To reach the most vulnerable communities, the initiative focuses on smallholder farmers, particularly women, and supports partner countries in developing their agriculture sectors to spur economic growth, increase incomes, and reduce hunger and undernutrition. The initiative also aligns resources behind science, technology, and innovations that improve the access, availability, and use of food.

We are proud to work with India a strong partner related to Feed the Future initiative for at least three reasons. The first is history. India’s own trajectory of development is even more widely known than our historical collaboration in the Green Revolution. Indeed, India’s economic growth over the past few decades should be highlighted for helping lift tens of millions out of poverty. A second reason pertains to innovation. India is becoming a hub for low-cost, effective local innovations that can address complex development challenges, not just within the country, but also in developing countries around the world. The third reason is the future of development cooperation. Now more than ever before, India plays an important role as a development partner, as highlighted by the Millennium Alliance for global development inaugurated in 2011 by USAID, India’s Technology Development Board, and the Federation of Indian Chambers of Commerce and Industry. Significant government and private sector investments from India can help promote economic growth in neighboring and African countries. India and the United States, as partners, are in a strong position to leverage our combined experience, expertise, and resources to reduce global hunger.

Building on the historic legacy of cooperation between India and the United States during the Green Revolution, we are now working together to develop, test, and replicate transformative technologies as part of what President Obama has described as the “Evergreen Revolution.” In close collaboration with host country governments, both our countries have agreed to adapt and share innovations, technologies, and expertise to build capacity and extend food and nutrition security, initially in three countries: Kenya, Liberia, and Malawi.

Today, we celebrate another milestone in our strategic partnership with India with the triangular partnership here at MANAGE, which aims to improve agricultural productivity, strengthen agricultural value chains, and support market institutions in Kenya, Liberia, and Malawi. Through the training provided by MANAGE, 180 agriculture professionals from these three countries will be trained in India over the next two years. After their training, these professionals will go home with new networks, questions, and potential innovations to address their domestic challenges in food and nutrition security.

Other Feed the Future programs are designed to complement and scale-up the knowledge-sharing and technical capacity-building integral to the MANAGE training highlighted here today. For example, U.S. collaboration with the Rural Hubs of the Confederation of Indian Industry (CII) seeks to overcome specific bottlenecks in agricultural value chains in the most difficult and underdeveloped areas of India. Together, the U.S. and CII will share “lessons learned” on modern technologies and methods of production with African farmers, who still struggle to access markets. Also, just last month, the U.S. and India launched another innovative program, called the “India-Africa Agriculture Innovations Bridge Program.” By sharing agricultural innovations, this “Bridge” aims to increase agricultural productivity in priority value chains, increase access to diverse and quality foods, and enhance climate resilience in agricultural production. All these programs have a common goal, namely: to share proven agriculture innovations from India’s private and public sector to address food insecurity, undernutrition, and poverty in the target African countries.

We have reason to anticipate promising results from our triangular engagement.

As landmark initiatives, the MANAGE training program, CII partnership, and the India-Africa Agriculture Innovations Bridge will at once pave the way for future partnerships between our two countries, and also serve as a model for strategic engagement on global food and nutrition security. Working together, we are determined to make significant progress toward ending hunger and poverty in our lifetimes, one step at a time.

Thank you for your attention.

Jonathan Shrier
Acting Special Representative, Office of Global Food Security
National Institute of Agricultural Extension Management (MANAGE)
Hyderabad, India
January 16, 2013

New Dimensions in Agricultural Extension Management Triangular Training Program