Shoprite CEO Pieter Engelbrecht is R36.4m richer, thanks to the rubbish competition his company has to deal with. That tidy sum is just one part of the R118m remuneration Engelbrecht bagged in financial 2026; it’s the part that was determined by Shoprite’s relative share performance over a three-year period starting in October 2023.
That’s the performance set against the walking wounded such as Pick n Pay and Spar, as well as Woolworths, Dis-Chem, Pepkor and Clicks.
Those six companies comprise the peer group selected by Shoprite’s remuneration committee to determine how well Shoprite scored in terms of relative total shareholder returns (TSR) versus its peer group. That TSR measure made up 50% of the metric used to determine how much would be paid out to Engelbrecht in terms of the group’s rather comically named Executive Super Stretch Incentive (ESSI) award.
No surprise that against a peer group comprising at least a few deadbeats, Shoprite did remarkably well. The weighted average TSR for the peer group over the three years was an astonishingly low 8.9%; although perhaps not so astonishing when you recall what happened to Pick n Pay and Spar during that period.
By contrast Shoprite achieved a total shareholder return of 49.9% over the three years. But stripping out the dividends and focusing on the company’s market capitalization between October 2023 and 2026, it looks as though Engelbrecht’s executive team oversaw an increase in share market value of just over 24%. Not much signs of a stretch there.
It’s almost ho-hum territory. Unless you’re competing with the likes of Spar and Pick n Pay. Then it’s superb.
Ho hum competitors
The other 50% of the ESSI metric was market-share gain. That’s gain in a market where the competition is largely Spar and Pick n Pay. The remuneration committee targeted gains of 2.6% over the three years; Shoprite achieved 3.2%.
So, thanks in great part to the weakness of its competition, Engelbrecht and his team were awarded 100% of the share rights they were allotted back in 2023. Engelbrecht received R12m in his 2026 remuneration package with the remainder coming in two equal instalments in 2027 and 2028.
He and his crew must be hoping that Phil Roux doesn’t get hold of Spar or that Spencer Sonn doesn’t light a fire under Pick n Pay. What would they do if they had to compete against reasonably effective players?
And there’s perhaps something else. Kwanele Ngogela of Just Share reckons the Shoprite executives are being rewarded more than once for the same performance, pointing out that existing schemes already reward performance linked to profitability, market share and shareholder returns.
“The board has not made a convincing case for what was so exceptional that it warranted another layer of remuneration for outcomes executives were already being paid to deliver,” Ngogela tells the FM.
More concerning is that there’s another once-off scheme on the horizon. “Just as this supposedly once-off scheme pays out, another extraordinary share award is being proposed,” says Ngogela. “At what point do these exceptional awards simply become another way of inflating executive pay?”
A R170m manacle
For Engelbrecht, the ESSI is about to be replaced by the CEO-ESP (executive share plan) award. This has a six-year performance period with a potential payout of over R170m — today’s value of the 525,000 Shoprite shares Engelbrecht will be awarded in terms of the plan.
The scheme is essentially designed to ensure Engelbrecht remains with the company for the next six years. The remuneration committee explains Engelbrecht has led the group “through a period of exceptional transformation, growth and shareholder value creation” and that the award is designed “to incentivize the successful delivery of a unique combination of strategic, transformational and succession-related outcomes and to secure his continued employment for a strategic six-year period.”
Do they really need to pay him this much to stay? It’s difficult to imagine where Engelbrecht would move to or that he would set up on his own. There’s absolutely no doubt Shoprite is a formidable and innovative operator, but it has a unique culture. Engelbrecht and his excellent team might struggle to flourish elsewhere.
Anyway, Shoprite shareholders will get to vote on the latest planned bonsella at the annual general meeting in November.
And then there are Shoprite’s general workers. Inevitably Ngogela is irked by the chasm between the board’s generosity towards its executives and its approach to workers at the bottom of the organization. Depending on whether it is cash paid or ‘total earned remuneration’, says Ngogela, “the CEO’s remuneration was between roughly 1 140 and 1 840 times that of Shoprite’s lowest-paid employee”.
Shoprite’s lowest paid employee earns R64 000 a year, equivalent to the national minimum wage.
Says Ngogela: “It’s difficult to reconcile the company’s commitment to fair and responsible remuneration with a system in which exceptional performance attracts millions in additional executive rewards while some of the workers who helped deliver that performance remain on the bare minimum the law allows.”
Succession windfall
Then there’s Woolworths, which also likes to bump up executive remuneration with special payments. There’s little doubt that in the six years since March 2020 ex-CEO Roy Bagattini did far better than any Woolworths’ shareholder. When he took over in February 2020 the share price was floundering around R38 before it tanked to R27, thanks to Covid. The share is currently at R39; it was around R50 when Bagattini exited in March.
Not only did the former CEO get a very attractive sign-on bonus, his departure payment is valued at almost R90m. Bizarrely, the R90m includes R20m just because Sam Ngumeni, the most obvious candidate, was appointed to replace him.
According to Woolworths, the share awards allocated to Bagattini in September 2024 and 2025 were subject to “ensuring an appropriate successor to his role and a smooth leadership transition that maintains continuity”.
Succession-planning is of course important, but it should be an integral part of executive management; not something deserving of an extra generous bonus.
And, given that this is Woolies and there’s a chance Ngumeni will not produce the goods, will Bagattini have to repay any of the R20m?
