Inside Prosus CEO’s $100m (R1.7bn) ‘moonshot’ incentive

Upon his appointment as CEO of Prosus (and Naspers) in July 2024, the board, which delegated the task to the human resources and remuneration committees, introduced a potential $100 million “moonshot” award for Fabricio Bloisi.

This would only come into play “if truly extraordinary net new value is created in the market capitalisation of the group”.

Read: Prosus CEO Bloisi aims to double revenue in next three years

While there was some pushback from certain shareholders, the votes on remuneration still passed, with 83% in favour (more than 16% voted against both resolutions at the August annual general meeting).

It shared some details of this “moonshot” award in the disclosure of Bloisi’s remuneration structure (made available along with other AGM materials).

It shares new details on this audacious and sizeable possible bonus in its latest integrated report.

Prosus says “Fabricio is incentivised to build shareholder value at an exceptional and peer-beating pace”.

Read/listen: The financial ambition at Prosus

There are two conditions that must be met simultaneously for the award to be triggered.

The market-cap target

First, the group’s aggregate market capitalisation (Naspers/Prosus) in US dollars needs to be doubled (or better) between 1 July 2024 and 30 June 2028.

Importantly, that value also needs to be maintained for at least a year (to 30 June 2029).

In practical terms, “the market cap of the group must double from US$84bn to US$168bn over a four-year period”.

“This implies a growth in value of an average of above 19% per year.

“Very few companies have achieved that consistently over four years,” it says.

“Put differently, the challenge to Fabricio is to add more new value to our group. To use comparisons from our peer group: create a ‘new company’ bigger than either of the present market cap of SoftBank, PayPal, Shopify or Airbnb.

“That is a tough assignment indeed.”

(It notes that the calculation will be adjusted for corporate actions that may create value for shareholders, but theoretically would reduce the market cap, such as distributions or spin-offs).

The shareholder-returns target

The second condition is that its net value creation over that period in terms of total shareholder returns (in US dollars), compared to its peer group, beats the 50th percentile.

Prosus says this peer group “includes some of the biggest, toughest and best companies in the world”.

These are: Adyen, Airbnb, Alibaba Group, Alphabet, Amazon, Auto Trader, Baidu, Bajaj Finance, BiliBili, Block, Booking.com, Chewy, Coupang, Deliveroo plc, DoorDash, eBay, Etsy, Exor NV, Expedia Group, FSN Ecommerce (Nykaa), Grab, IAC, JD.com, Kinnevik, Kuaishou Technology, LY Corporation, Match Group, Meituan, Mercado Libre, Meta Platforms, NetEase, Ocado Group, One97 Comms, PayPal, Pinduoduo, Pinterest, Rakuten Group, Schibsted ASA, Sea Limited, Shopify, Snap, SoftBank Group, Trip.com Group, Uber Technologies, Vipshop, Wayfair, Zalando, Zillow Group and Zomato.

The reward …

Prosus says “if he meets all these conditions, Fabricio will receive a special once-off award of US$100m in Prosus and Naspers shares (split 70/30) in July 2029 that recognises truly exceptional performance”.

The group and board “believe this LTI [long-term incentive] award will be very difficult to achieve, as it sets up two separate hurdles”  – which they say are both tough.

“Firstly, Fabricio has to double the market capitalisation of the entire group within four years. With the aggregate market capitalisation of Prosus and Naspers at US$84bn on 1 July 2024, the target is US$168bn in four years.

“Secondly, Fabricio has to outperform the majority of our peers – some of the most energetic and best tech groups in the world,” it adds.

“We believe the relative size of the award is therefore justified if both conditions are achieved, in which case the reward will be a small fraction of the total new net value created.”

More ‘earthly’ incentives

Aside from the “moonshot” incentive, Bloisi was awarded long-term incentives – Naspers performance stock units, Prosus performance stock units and Naspers Global Ecommerce share appreciation rights – with a fair value totalling $54 million (currently around R964 million).

This equates to an annual award averaging $13 million (R232 million) a year across his four-year tenure.

Read: Shrinking JSE means growing problems for your investments

Prosus says “during his current tenure, no additional long-term incentive awards are expected to be made.”

After a year, how is Bloisi tracking against the moonshot incentive?

Well, the group’s aggregate market capitalisation (in US dollars) is up about 40%.

That’s a strong start.

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.