Retail CEO earning up to R330,000 a day – Woolies vs Pick n Pay vs Shoprite

Despite South Africa’s difficult trading environment as of late, leading retail CEOs earned massive paydays, with Woolworths’ CEO Roy Bagattini almost doubling his closest rival, Shoprite’s CEO Pieter Engelbrecht.

Over the past 18 months, food retailers – like many other businesses in South Africa – have had to operate in an economy that’s seen less than 1% growth due to stubbornly high inflation, heightened food and fuel prices, and the lasting effects of load shedding.

Retailers such as Woolworths, Shoprite, Spar, and Pick n Pay have had to fork out billions of rands to escape the costs of load shedding – along with other operational expense increases.

Despite this, the majority of these retailers managed to maintain a robust trading performance while growing revenue and the business.

In its financial results for the full year ending on 30 June 2023, Woolworths showed strong growth as its financial performance improved on the back of the sale of embattled Australian retailer David Jones.

Across the group’s entire operations, earnings per share (EPS) increased from 381.4 cents in FY22 to 542.0 cents in FY23 (+42.1%), whilst headline earnings per share (HEPS) grew from 398.9 cents to 514.7 cents (295%.

Thus, the board upped its total dividend by 36.4% from 229.5 cents in FY22 to 313.0 cents in FY23.

Shoprite reported in its group results for the 52 weeks ended July 2023 that it gained record levels of market share as sales of merchandise increased by 16.9% to R215 billion, underpinned by its core Supermarkets RSA segment, as sales of merchandise increased by 17.8% to R173.6 billion.

With both Woolworths and Shoprite delivering strong results of late, it is likely their shareholders will not be unhappy with the big paydays for the CEOs.

However, it hasn’t been smooth sailing for all retailers, as Pick n Pay posted a significant loss for the six months ended 27 August 2023 (H1 FY24), as the group’s key core supermarket business took a severe hit due to load shedding expenses and employee restructuring.

Profit before tax was impacted by a 47.3% increase in net finance charges, resulting in a pro forma loss before tax and capital items of R837.2 million. Overall, the group’s headline earnings per share (HEPS) dropped 241.5% from a profit of 97.73 cents per share in H1 FY 23 to a loss of 138.24 cents per share in H1 FY24.

CEO pay

Of the major retailers, Woolworths’ CEO Roy Bagattini earned the most, with his single-figure pay amounting to R122.47 million in 2023.

He earned R90.6 million for work in South Africa and was paid AUD$2.6 million (R31.8 million) as he spent some time in Australia, where the group’s clothing chain Country Road is located.

Bagattini’s remuneration comprised a guaranteed pay of R20.4 million, short-term annual incentives (STIs) of R28 million, long-term share options awarded three years ago that amounted to R66.7 million and R7.1 million in share dividends.

Stripping out the long-term share options of R66.7 million awarded to him three years ago, along with R7.1 million in share dividends, Bagattini took home a total basic pay with short-term annual incentives (like bonuses) of about R48.4 million.

Bagattini’s salary equates to him earning around R335,529 a day.

Shoprite CEO Pieter Engelbrecht took home a total pay package of R64.66 million (including long-term incentives, like share allocations) in the 2023 financial year – just over half of Bagattini’s remuneration. This equates to R177,167 per day.

Excluding the long-term incentives of R26.82 million that Engelbrecht received in 2023 but earned in previous years, this leaves him with basic pay and short-term incentives of about R38 million.

Even without long-term incentives, Bagattini still earned R10 million more than Engelbrecht, the annual reports of both companies showed.

This is despite Shoprite’s market value of R140 billion being much larger than Woolworths (R46 billion). Additionally, Shoprite has a significantly larger number of stores.

However, it should be noted that company remuneration committees consider several factors when deciding on pay packages and how they are structured, including share price performance.

Pick n Pay’s Pieter Boone was paid even less, equating to just over a third of what Engelbrecht was paid, and over five times less than Bagattini. Boone raked in R24.69 million in 2023 – working out to R67,643 per day.

Surprisingly, although Boone has been removed from the CEO opposition – as a result of the poor performance of Pick n Pay’s core business – he was paid a performance bonus of R9.8 million.

Sean Summers returned to Pick n Pay to replace Pieter Boone as CEO with immediate effect as of 2 October 2023, in the hopes of turning the retailer around.

These three Food retail CEOs and how much they earned in 2023 are given in the table below.

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