Prosus Investors Push Back on Share Structure and Executive Pay

Some of the world’s biggest investors have signaled that they object to the share structure of Prosus NV and its parent company Naspers Ltd. and how the companies pay their executives and board members.

In disclosures of how they will vote at the companies’ annual general meeting on Aug. 26, Norway’s Storebrand ASA and the Netherlands’ Van Lanschot Kempen NV said they’ll go against the reelection of board members Rachel Jafta and Mark Sorour because of the share structure. Their decisions largely tally with the recommendations of the world’s largest proxy-advisory firms.

Funds falling under the New York City Comptroller also indicated they’ll vote against the directors without giving reasons as did the California Public Employees’ Retirement System. Norges Bank Investment Management, which oversees about $2 trillion in assets, objected to pay proposals at Prosus along with the California State Teachers Retirement System.

The dissent is the latest indication that shareholders are unhappy with the super-share structure that gives a small group of insiders including billionaire and Chairman Koos Bekker 1,000 votes per share held compared with a single vote for an ordinary security. The investors also objected to the potential quantum of pay, the short-term nature of some performance incentives and limited controls on share repurchases.

Unequal Rights

“A vote against the elections of Rachel Jafta and Mark Sorour is warranted due to the company maintaining a share structure with unequal voting rights” because of their ties to Naspers, Storebrand said in its voting intentions.

It also said targets, including a so-called moonshot award with a notional value of $100 million and long-term incentives of $33.8 million, for Chief Executive Officer Fabricio Bloisi raise “proportionality concerns.”

“While the moonshot is subject to rigorous dual conditions and has not triggered, the overall quantum is significantly above market norms,” Storebrand said.

The scale of the Prosus and Naspers dual-voting system at 1,000 votes for every A share held is more unusual than in many other tech companies. Meta Platforms Inc.’s Mark Zuckerberg and Alphabet Inc.’s Larry Page and Sergey Brin also hold control of their companies through dual-share voting. But their shares can cast 10 votes for every one held by an ordinary share.

In annual shareholder roadshows, the chair of Naspers’ remuneration committee engages “extensively and proactively with investors on all matters of remuneration and policy matters, particularly how we are evolving our policies based on the feedback given,” the company said in response to questions.

It referred questions on the dual-class structure — in place since 1995 — to its website, adding that it remains “committed to an open and ongoing dialogue” with shareholders.

Naspers, founded in South Africa more than a century ago, evolved from a newspaper business into a technology firm and operates its internet businesses mainly through Euronext-listed Prosus.

ISS, Glass Lewis

Institutional Shareholder Services, the world’s largest proxy-advisory company, recommended against the reelection of Sorour and Jafta. It also backed voting against the election of Manisha Girotra because it says she is on too many boards.

“The election of directors Rachel Jafta and Mark Sorour is raised for shareholder attention given the controlling shareholder, Naspers, holds shares with unequal voting rights,” ISS said. “Both directors have ties to Naspers.”

Sorour is a former executive of Naspers who didn’t observe a cooling-off period after his resignation, while Jafta has been on Naspers’ board for 20 years, ISS said.

Regarding the moonshot remuneration awards, ISS said the conditions “appear unlikely to be met within the performance period.”

ISS advises Storebrand, Van Lanschot Kempen, Norges Bank and the New York City Comptroller.

Glass Lewis & Co., ISS’s biggest rival, recommended against reelecting Jafta to the board at Naspers and said the remuneration policy at Prosus should be rejected because of its structure and “insufficient response to shareholder dissent.”

Glass Lewis advises the two Californian pension systems.

Shareholder concerns have been raised at previous AGMs only for them to be overruled because of the voting structure.

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