JOHANNESBURG – Pick n Pay chief executive Richard Brasher received a bumper R32 million pay package in 2018 after the food retailer extended the terms of his binary share award.
The group said in its 2018 integrated annual report released yesterday that the share award was due to vest in November 2017, subject to the attainment of a share price eligibility hurdle of R68.03. It said a special meeting was held to extend the terms.
The group said Brasher had successfully implemented the strategy to reset the long-term earnings trajectory of the group.
“The prevailing political and economic climate had resulted in negative sentiment in the local equities market, and the committee acknowledged that the substantial once-off costs related to the voluntary severance programme (VSP) could negatively impact the share price in the short term. The committee agreed that Richard should not be disadvantaged for strategic action taken for the long-term benefits of the group,” said the annual report.
Pick n Pay implemented a VSP through which it reduced its workforce by 10 percent in the year under review at a once-off cost of R250m.
Brasher, who was appointed in 2012 after leading UK-based retailer Tesco, earned R11.4m in 2018. Pick n Pay chief financial officer Bakar Jakoet received a R20m package during the period, the annual report said.
Damon Buss, an equity analyst at Electus Fund Managers, said Brasher’s remuneration package was incentivised by binary options on 1 million shares, originally due to vest in November 2017, which would pay out if the Pick n Pay share price exceeded certain hurdles.
Buss also said that prior to the original November 2017 vesting date, the share price was below the lowest hurdle of R68.03 and hence Brasher’s options would have expired at R0.
“Hence, the Pick * Pay board granted Brasher an extension of 12 months on the vesting date without any changes to the hurdle rate required. The board argued the short-term cost of the strategic actions to fix the long-term earnings trajectory had unfairly prejudiced Brasher’s chance to earn the incentive.
“At the vesting date in November 2018, Pick n Pay’s share price was above the lowest hurdle and hence the binary options vested,” Buss said.
Brasher’s remuneration comes as the retailer managed to regain market share from its competitors Shoprite and Checkers during the year ended in March.
The company declared a total annual dividend of 231 cents per share, up 22.4 percent, which amounted to more than R1 billion for shareholders. The robust results were driven primarily by strong performance in South Africa, which comprises the Pick n Pay and Boxer brands, while there were “operating challenges” outside local borders.
Pick n Pay had posted muted turnover growth of 5.3 percent to R81.7bn as it grew revenue from a growing owned and franchise estate, serving more customers with stronger offers.
Pick n Pay shares rose 1.93 percent on the JSE on Monday to close at R72.