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Pick n Pay chief executive Sean Summers has been granted a substantial amount of shares as an incentive to turn the struggling retailer around. In an announcement, the group says it granted him four million shares in its restricted share plan earlier in July.
At R27 a share, these could be worth as much as R108 million.
These are subject to specific performance conditions that “combine qualitative and quantitative indicators critical to the turnaround of the core Pick n Pay supermarket business”. It has not disclosed these but will do so in next year’s annual report.
The shares will vest in three tranches:
Summers’s shares are in place for the next 32 months, which is the term of his employment contract.
The succession criterion
He is under tremendous pressure to find a successor for himself over this time.
Not only is it a specific criteria of his performance shares, it is also his number one priority (out of six announced at its most recent results). In this, it plans to re-organise its leadership structure and “strengthen it with seasoned experts and establish clear succession plans”.
The group has failed on this count since Summers’s original (‘forced’) departure in 2006.
Nick Badminton took over with great success, which waned when Richard van Rensburg took over. Richard Brasher (ex-Tesco) had some success off a low base.
But by then the cuts had taken Pick n Pay to the brink. Pieter Boone’s tenure was laughable.
A misguided strategy and a chief executive who was totally out of his depth saw the group almost hit the wall.
Thus, the desperate call to Summers.
Basic package
Summers is being paid very modestly as CEO. In the five months between Pieter Boone’s departure and the end of Pick n Pay’s financial year (28 February 2024), Summers was paid a round R10 million (R2 million a month).
He received no retirement, medical or other benefits (and is technically above the group’s mandatory retirement age).
Still, Summers is independently wealthy and did not need to come back to the group.
He did so after being asked by the Ackerman family to turn around the group.
It is unclear whether he will be paid at the same level in the year ahead. Boone was paid a total of R25 million for last year; however, this included a termination settlement of R16 million.
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