Shoprite’s R83 million bargain
Shoprite paid its chief executive Pieter Engelbrecht R83 million over the last year, which is a bargain considering what he has done for the company.
Shoprite released its annual report on 14 October 2024, which showed that Engelbrecht achieved a payment package of R83 million in 2024.
It should be noted that R83 million was achieved through various incentive schemes but not the actual amount awarded to him.
Shoprite’s financial statements showed that the actual amount awarded to Engelbrecht in the 2024 financial year was R52 million.
The R52 million includes a guaranteed salary, short-term incentive (STI), and shares (ESP) awarded during the financial year.
As set out in the integrated report, the remuneration report highlights the single figure amount, R83 million, as per the King IV report.
This single figure includes guaranteed salary, STI, and ESP awarded 3 years ago but achieved in the 2024 financial year.
It also includes an executive deferred incentive achieved in the last financial year, which will vest in 2026, and dividends paid in 2024.
Simply put, Engelbrecht achieved an R83 million pay package in the 2024 financial year but was paid R54 million.
This is a healthy pay package in most people’s books, bar Elon Musk and a few high-profile sports stars.
Many people used this opportunity to question executive remuneration and highlight the difference between Engelbrecht’s pay and that of a low-level worker.
What is typically excluded from these discussions is that Engelbrecht is brilliant and worked for decades to reach his position.
Similar to exceptional sports stars like Roger Federer, Tiger Woods, and Usain Bolt, who earned millions yearly, top CEOs are rare.
Very few people have the talent, grit, and work ethic of business leaders like Adrian Gore, Whitey Basson, Shameel Joosub, Brian Joffe, and Koos Bekker.
They are the rainmakers. They create tremendous wealth and are willing to dedicate their lives to making a business a success.
Former Shoprite chief executive Whitey Basson, who built the company from a small operation to a global retail powerhouse, is a good example.
Under his leadership, he transformed Shoprite from an 8-store chain to the largest food retailer in Africa, comprising 1,649 stores in 15 countries and employing 130,000 people.
Basson received a pay package of R628 million for his achievements in 2011. This is one of the biggest pay packages ever in South Africa.
While it drew criticism from some quarters, Shoprite chairman Christo Wiese described Basson as a rare talent.
“If I could find another Whitey Basson, I would happily pay him a billion,” Wiese said in response to Basson’s pay package.
Pieter Engelbrecht’s achievements
Pieter Engelbrecht is a chartered accountant. He holds an Honours in Accounting Science from UNISA and a Bachelor of Commerce (Accounting) from Stellenbosch University.
From 1993 to 1995, he gained experience in PricewaterhouseCoopers’ auditing and corporate finance divisions.
Before joining Shoprite on 1 April 1997, he served as an accounting and operations manager at Harwill Industries.
Engelbrecht spent ten years leading Shoprite’s project office, establishing new brands and building many into multi-billion rand businesses.
He launched the Money Market financial service counter, USave and LiquorShop, and led the acquisitions of Computicket and Transpharm Pharmaceutical Wholesalers.
He was appointed to the Board of Shoprite Checkers in 2003 as an Alternate Director of Shoprite Holdings and as Chief Operating Officer of Shoprite Checkers in 2005.
As COO, Engelbrecht drove down costs and played a pivotal role in guiding the group’s expansion, making Shoprite the largest retailer in Africa.
Engelbrecht was appointed as Shoprite CEO on 1 January 2017 after Whitey Basson retired after four decades at the helm.
Engelbrecht’s leadership has been characterised by an obsession with affordability for customers and innovation.
Under Engelbrecht, Shoprite’s share price increased by 73%, and the company significantly outperformed its main competitor, Pick n Pay.
When he took the reigns in 2017, Shoprite Checkers had 2,689 stores, 143,802 employees, and an annual turnover of R141 billion.
In 2024, Shoprite Checkers had 3,639 stores, 160,216 employees, and an annual turnover of R241 billion.
South Africa greatly benefited from Engelbrecht’s leadership. He created thousands of jobs, the government received billions in taxes, and shareholders enjoyed great returns.
The table below summarises Shoprite’s performance under Engelbrecht’s leadership.
Measure | 2017 | 2024 | Change |
Stores | 2689 | 3639 | +35% |
Employees | 143802 | 160216 | +11% |
Turnover | 141 | 241 | +71% |
Share Price | 16733 | 29000 | +73% |
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