Johann Rupert and his son’s surprising remuneration

Remgro’s latest annual report revealed that its chairman, Johann Rupert, and his son, Anton Rupert, did not receive any payment for their services.

Johann Rupert is closely linked to Remgro and has been the company’s chairman from the outset.

Remgro was created in 2000 when Rembrandt was restructured into two publicly traded holding companies – Remgro and Venfin.

Remgro oversaw Rembrandt’s traditional assets, including its tobacco, financial services, mining, and industrial interests. Venfin housed the telecommunications and technology assets.

In November 2008, Remgro unbundled its investment in BAT through an interim dividend amounting to R55.2 billion.

Following the BAT unbundling, Remgro’s remaining interests consisted mainly of investments in banking and financial services, industrials, mining, food, and wine.

It included companies operating in printing and packaging, motor components, glass products, medical services, petroleum, food, wine and spirits.

In November 2009, Remgro and VenFin merged again, adding media and technology interests to the group’s investments.

Today, Johann Rupert is the chairman of all the companies which was created through Rembrandt – Remgro, Richemont and Reinet.

Remgro, with a market cap of R81 billion, is one of the continent’s largest investment holding companies.

Johann Rupert, through Rupert Beleggings, is Remgro’s principal shareholder. He holds all the issued unlisted B ordinary shares, entitling him to 43.09% of the total votes.

It is widely known that he has an iron grip on the company, which extends beyond his voting rights or his position as chairman.

Rupert’s grip on the companies resembles Warren Buffett’s control over Berkshire Hathaway or Mark Zuckerberg’s control over Facebook.

Anton Rupert, Johann’s son, was appointed to the Remgro board on 29 November 2018 and is a member of the strategic security committee.

An interesting note in the latest Remgro annual report is that Johann and Anton Rupert did not receive any money for serving as directors.

The report stated, “Anton Rupert, Johann Rupert, and Paul Neethling receive no emoluments”.

Although it is uncommon in South Africa, this principle is not bad. Buffett and Berkshire Hathaway promote the idea that board members should be large shareholders.

There is not one director on the Berkshire Hathaway board who does not own a significant interest in the company.

“Any recommended candidate should own Berkshire stock that has represented a substantial portion of the candidate’s investment portfolio for at least three years.”

Berkshire Hathaway also does not pay its directors much. It is a fraction of what South African directors at big companies get paid.

This policy makes it easy to ensure the directors prioritise the long-term interests of shareholders over short-term gains.

The table below shows Remgro’s directors’ and key management personnel’s emoluments over the last financial year.