Pick n Pay dangles R108 million carrot for CEO

Pick n Pay CEO Sean Summers is set to earn R108 million if he reaches several performance-related goals.

In May 2024, the remuneration committee decided to award Sean Summers 4,000,000 performance-based shares under the terms and conditions of its Restricted Share Plan (RSP shares), with performance conditions linked to targets under the group’s long-term plan.

The Shares are issued at a nil cost and may vest, subject to performance conditions being met over 32 months.

The performance conditions include qualitative and quantitative performance indicators critical to the turnaround of the core Pick n Pay supermarket business.

At the deemed value of the award at a share price of R27.00, the reward works out to R108 million.

However, given that Pick n Pay’s share price has been heavily affected by poor performance over the last year, this could rise even further.

Salient details of the RSP award are as follows:

Pick n Pay is proceeding with several initiatives to improve its finances, including a R4 billion rights offer.

The group previously said that the proceeds from the rights offer would stabilise its balance sheet, priming it for longer-term sustainable growth.

For the year ended 25 February 2024 (FY24), the group recorded an R3 billion loss following the poor performance of its Pick n Pay grocery stores.

For the rights holder, Pick n Pay shareholders can commence trading the letters of allocation at 09:00 on Wednesday, 17 July 2024, until the close of business on Tuesday, 30 July 2024.

The rights offer is part one of the two-part capital raise to stabilise the group’s balance sheet, strengthen liquidity and unlock shareholder value.

A listing will follow the rights offer in shares of the Boxer business, which, along with Pick n Pay clothing, is one of the only positives for the overall group. Boxer made R1.9 billion in trading profit in FY24.

Summers previously said that the capital raised from the rights offer and the initial public offering (IPO) would allow the group to start focusing on the core Pick n Pay retail business by reducing debt.

“Our balance sheet needs to be restructured and stabilised,” said Summers.

“This is the appropriate action, at the right time, to help our turnaround strategy.

“We have totally reorganised our leadership team and strengthened and simplified our operational structure to drive rapid decision making, focusing on better in-store execution and excellent customer service.”

“Cutting debt and creating a sustainable platform for investment in growth is the next big step towards unlocking the Group’s clear potential, and more details of our turnaround plan will be announced when we release our results in May.”

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