It was the timing of Naspers’s announcement of Bob van Dijk’s departure that took most by surprise.
For years analysts and investors had criticised his skills as the key driver of an enormously wealthy tech investment company. The focus of their criticism was the widening discount between the Naspers share price and the value of the group’s investments, chiefly Tencent, and more recently the use of expensive corporate advisers to find a solution.
Most had given up on the prospect of Van Dijk being replaced. It seemed the main decisionmakers in the group, where governance is skewed by the high-voting A shares controlled by chair Koos Bekker and director Cobus Stofberg, were confident that Van Dijk would eventually deliver the goods.
Indeed, so confident that they were happy to endorse the hundreds of millions paid to him each year. And paid to him despite the lack of any evident success, or at least success measured by something more persuasive than internally generated valuation statistics.
Few analysts were convinced by the line pitched by Bekker during the shareholder teleconference, held just hours after the brusque Sens announcement that it had been mutually agreed (between the boards of Prosus and Naspers, and Van Dijk) that Van Dijk would step down from his job of 10 years, with immediate effect.
The typical tenure of an IT CEO is seven to 10 years and Van Dijk wanted to pursue other ventures, was the chair’s message.
“Why would they pay someone so much money every year, if it turns out he’s something of a commodity with a specific shelf life?” asked one puzzled investor. And given that this expiring shelf life had been on the horizon for several years, why does the “mutually agreed” announcement sound as though the decision was taken over the weekend?
Investors may have to wait until the release of the 2024 annual report next June to get some indication of just how mutual the decision was. The report will have to provide details of Van Dijk’s departure package, details that would reveal how much of the $80m worth of unvested share awards he will be able to bank.
Naspers’s Charlie Pemberton tells the FM there will be no fast tracking or early vesting of any long-term incentives. “Bob will only be eligible for LTIs [long-term investments] that vest before he leaves the company on September 30 2024,” said Pemberton. “He is obviously still eligible for LTIs that have already vested but which have yet to be exercised.”
Protea Capital’s Jean Pierre Verster wasn’t persuaded by the explanation provided during the teleconference. “Did something happen over the weekend?” asks Verster, who points out that the much-disliked cross-shareholding had just been unwound.
Though the announcement was sudden, Verster says Van Dijk’s tenure began to look shaky when the tech bubble burst in 2021. “This triggered a significant change in his environment, which was aggravated by the increase in the cost of capital,” says Verster.
Verster says from then on profitability became considerably more important. He describes Van Dijk, with an M&A background, as a “growth executive”, more accustomed to making acquisitions than profits. “But from 2021 he was forced to focus on unlocking the value of the group’s current portfolio and generating profits.” The promise was for consolidated e-commerce trading profit in the first half of 2025.
The board may not have been persuaded by the slow progress on the profit front which, in Van Dijk’s defence, was affected by a few curveballs beyond his control such as the forced disposal of one of Prosus’s most valuable investments, Russia-based classified business Avito.
Sasfin’s Alec Abraham is also puzzled by the timing of Van Dijk’s departure. “In the past year he seemed to be making definitive decisions, selling off a few businesses, pulling back on expansion plans. So why not stay on until he delivered on the profit promise?”
The promise of trading profit in the first half of 2025 is still on track, the group said in its Sens announcement. Also on track is the open-ended share repurchase programme. Bekker assured those on the teleconference that Tencent will continue to be an intrinsic part of Naspers.
The interim CEO, Ervin Tu, reiterated the shift of focus, telling the teleconference that management was now concentrated on operations and not acquisitions.
Tu, who joined Prosus from SoftBank in 2021, is tipped as one of the candidates for the permanent position. But, as Verster says, though Tu looks to be a strong candidate, he, like Van Dijk, comes from an M&A background.
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