Naspers chair Koos Bekker said his decision to work without a salary when he was CEO helped him focus on building the value of the company, but he wouldn’t recommend it to everyone.
In an interview with Fin24 at his Naspers office in Cape Town, Bekker said that not taking a salary during his 17 years as CEO was a gamble that, after a shaky start, eventually worked out for him.
“I don’t recommend it to everyone, because it’s high risk,” said Bekker, who started his new role as chair in April.
Bekker’s decision was quite controversial at the time. He agreed to a deal in terms of which he received no salary, bonus or pension, and could be fired at 24 hours notice with no compensation. In return, he got generous options at the market price of Naspers shares.
“During the first five-year term, I worked as hard as I could. But the internet bubble burst in 2000 and the market collapsed. So after five years, I earned zero cash and my options were worthless.”
Bekker could survive, because a decade earlier he was a founder of MTN and made substantial profits on that.
In the following decade, Naspers saw remarkable growth mainly as a result of its global internet acquisitions.
His options paid off handsomely.
Aligning your interests
Has anyone followed this model? A few executives did in the US; however, as far as known, no South Africans have followed, including in the Naspers group. Why not?
“From a personal point of view the risk is high. Unless you’ve made some money early in life that can tide you over if things go wrong, you can actually land up in financial difficulties,” he explained.
“The positive side is that it aligns your interests to that of the company and you tend to think like a co-owner,” he said.
“So when you’re sitting in the bath you remind yourself: ‘it doesn’t matter what the share price is tomorrow evening, but it does matter a great deal what it’s at five years hence. When there’s no fall-back and no parachute … A gun to the head concentrates the mind admirably.”
Bekker’s new role as chair
Bekker won’t be drawn on Naspers’s recent performance.
“In business, one should never take anything for granted. Your fortune can change in five minutes. Naspers will continue to invest in emerging markets, to try new technologies, to seek out the next generation of young entrepreneurs with ambitions that we can back.”
Bekker said that the roles of CEO and chair differed completely.
“The CEO is the captain of the ship, he makes the executive decisions fast and with enough authority to sail the ship,” he said. “A non-executive chairman is more … a strategic figure in the background.”
“So [Naspers CEO] Bob van Dijk is running the company and I think so far he’s done pretty well,” Bekker said.
* Fin24 is part of Media24, a subsidiary of Naspers.