STOCK TAKE | Discovery executives make bank

play article
Subscribers can listen to this article


Discovery executives make bank

Rumination report

It's Financial Journalism 101 that anything published on the Stock Exchange News Service after 17:00 on a Friday deserves extra scrutiny.

It's an irresistible slot to bury bad news, with many South African company watchers' attention already diverted by a tall glass of frosty by that time.

This past Friday's JSE Unhappy Hour yielded the announcement that Discovery's annual report is available. Of particular interest is its contentious remuneration report. Shareholders holding 40% of the company's shares voted against its implementation at the last annual meeting.

After consulting with these unhappy shareholders, Discovery said their gripe is that performance targets, which remuneration is measured against, were too "non-financial". These key performance indicators have been changed to 65% (from 60%) for financial targets and 35% non-financial (which include ESG). Also, some shareholders were unhappy that two-to three-year rolling measures were used, which they say rewarded "backward-looking" performance. This was changed to one year for most financial targets.

Ahead of proposed new changes to the Companies Act, which will force businesses to report the gap between lowest-paid workers and highest-paid executives in a company, Discovery is now also awarding annual increases of at least 10% to those employees who earn below R148 000 per year.

The lowest-paid workers have some catching up to do: The top seven executives at Discovery received almost R190 million (including bonuses and vested shares) over the past year. Founder and CEO Adrian Gore got more than R28.3 million.

Will shareholders look more kindly on these pay packages? Probably not. While the company has tweaked some remuneration rules, investors won't be in a particularly good mood to reward performance.

Discovery's shares have lost 14% over the past year, and shareholders haven't received dividends since March 2020. The company is pumping all its cash into its new ventures: its local bank and short-term insurance business, and its Chinese health insurer Ping An.

Discovery executives have their work cut out for them. The exuberance about China has truly soured in recent weeks, while short-term insurance is facing a perfect storm in SA and there has been some pushback against Discovery's efforts to bulk up its bank clients – including by forcing Discovery Health clients who signed up to Vitality to open a Discovery Bank account if they want to access travel rewards.

While holding onto dividends may not sweeten the shareholder mood, it seems prudent amid the many demands of growing new businesses.

And in the end, executives don't have to worry about unhappy shareholders standing in the way of big payouts anyway.

Currently, shareholder votes are non-binding: shareholders can vote against executive remuneration year after year. In the worst-case scenario (if more than 25% voted against), the company must consult with shareholders about their concerns. Until this changes, investor discontent about remuneration doesn't mean much.

Quote of the day

Our argument remains, if Eskom debt is taken over by the central government, what our people owe Eskom in townships, informal settlements and hostels must also be scrapped.
Panyaza Lesufi

Comparison of the day

Number of the day

3 600

Number of South African homes valued at more than $1 million (R18 million) as at June 2022. (Source: New World Wealth)


STOCK TAKE | Heineken keeps it green, Godongwana's careful words and SA's tax revolt odds

STOCK TAKE | In praise of SA's great worriers

STOCK TAKE | Eskom (sort of) stimulates business spending, while super yacht heads SA's way

STOCK TAKE | Telkom gets jilted and Markus 2.0

STOCK TAKE | The Dis-Chem drama - and Pick n Pay slump points to trouble ahead

STOCK TAKE | A tale of two smelters, and did banks get it wrong on home loans?

STOCK TAKE | Reserve Bank walks the hawk talk and Harmony re-emerges down under

STOCK TAKE | Allan Gray takes shine to Gold Fields - and Anglo's Kusile-sized generator

STOCK TAKE | Pick n Pay's big bet - and should you follow Gerrie?

STOCK TAKE | Is Sasol's hydrogen plan just hot air?

STOCK TAKE | Karooooo grows its Os and Ackerman states it like it is

STOCK TAKE | A German cure for SA labour woes - and what’s Schadenfreude in Swedish?

STOCK TAKE | Allan Gray takes shine to Gold Fields - and Anglo's Kusile-sized generator

STOCK TAKE | Telkom avoids signal loss amid the Rain - and the Woolies wage way

News24 encourages freedom of speech and the expression of diverse views. The views expressed in this column do not necessarily represent the views of News24. 

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Show Comments ()
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders