It’s clear Bob van Dijk was fired…but why?

At least Monday morning’s announcement that Bob van Dijk would step down as Prosus and Naspers CEO with immediate effect totalled 193 words. The part dealing with his departure runs to 106 words, double that of Transaction Capital’s statement last week regarding its CEO David Hurwitz.

As always with these kinds of announcements, a lot can be gleaned by what is said and what’s left unsaid.

Some reporting on Monday stated that this was by “mutual agreement”. However, the reality is a lot more nuanced (and a very clever play with words). The only decision that was “mutually agreed” was between the two groups’ boards.

Noticeably, there were some – but not many – platitudes offered in the statement (unlike, say, in the one concerning Hurwitz).

Bob van Dijk ‘asked to leave’?

Van Dijk was almost certainly fired (or the more politically palatable “asked to leave”), plain and simple.

The board wanted him replaced. He didn’t exactly wake up on Monday and out-of-the-blue decided to resign.

It is incredibly unusual for a CEO to leave with immediate effect. More so for the head of a global consumer internet group with a market value of nearly €80 billion (R1.1 trillion). Naspers’s market cap is an additional R1.3 trillion.

ALSO READ: Naspers, Prosus say bye-bye to CEO Bob van Dijk

Those who wield the power

Of the 15 people on Prosus’s board (excluding the CEO), seven either have deep, lengthy ties to Naspers, or were previously executives at the group or at group entities such as MultiChoice. All six, with the exception of current CFO Basil Sgourdos, are described as “independent” (a story for another day).

The convoluted shareholding structures of Naspers and Prosus results in entities Nasbel, Keeromstraat and Wheatfields effectively controlling both groups.

Based on Competition Tribunal proceedings in 2017, non-independent non-executive chair Koos Bekker and fellow Prosus non-exec Cobus Stofberg hold shares – either directly or indirectly – in two of these entities.

This means it is highly unlikely for Van Dijk’s departure to have taken place without the sanction (or insistence?) of Bekker. Similarly, Van Dijk’s appointment as CEO in 2014 would’ve surely enjoyed Bekker’s support.

Bekker’s ostensible influence over the group is widely known, and accepted. The decision to introduce the elaborate cross-holding structure between Prosus and Naspers (now unwound), the call to sell down the Tencent stake … all of these would’ve had his backing.

Bekker is the closest thing to a “founder” that Naspers has – in its current guise, at least. This makes Van Dijk’s exit somewhat similar to that of Transaction Capital’s Hurwitz, who was effectively forced out at the behest of the three founders.

ALSO READ: Koos Bekker, the dragon-slayer

Curious board decision of Ervin Tu

One of the more curious decisions made by the board is that investment chief Ervin Tu, and not CFO Sgourdos, will assume the role of interim CEO.

Tu joined the group in 2021 from the Softbank Vision Fund, where he was a managing partner. That fund has hardly delivered an excellent performance!

A report on Techcrunch says: “Someone with knowledge of the companies indicated that the transition had been planned for a while, as Van Dijk had accomplished almost all the objectives he had outlined for himself.”

Even if this were true (at 51, he is very young in global executive terms), the immediate nature of his departure is atypical.

It is probably not related to investment decisions and the group’s performance to date, as there were multiple other situations where a resignation would’ve been less of a surprise.

There hasn’t exactly been a wall of public shareholder pressure to get him out (and the control structure makes this practically impossible). And Tu’s sudden elevation is a sure sign that none of this was planned.

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Van Dijk: Why ‘immediate’?

What could the reason for the sudden exit be?

Perhaps there’s a large, looming problem in one of its investee companies that’s going to require a significant write-down? These situations can be one of those ‘make-or-break’ ones.

We’ll know if this is the case by the time any such company releases its interim results at the end of November – but given that Sgourdos is staying as CFO, there’s unlikely to be something like this lurking.

There’s no mention of Van Dijk being off to pursue any “other opportunities”, so it can’t be that.

Plus, his record of delivering shareholder value at Prosus is, ahem, rather questionable, despite the group’s assertion in Monday’s announcement that “he established the group as a leading global consumer internet company, creating significant value for shareholders”.

Inappropriate behaviour, relationships?

There is also a not insignificant percentage of executives who depart Fortune 500 companies immediately due to ethical lapses or governance reasons.

While there is absolutely no indication or even hint that this could be the reason for Van Dijk’s exit, these kinds of stories do have the habit of eventually making their way into the public domain.

Van Dijk’s sizeable remuneration in his near-decade at Prosus (/Naspers), including short-term incentives (STIs) and long-term incentives (LTIs), is subject to malus and clawback provisions. This is the case for all executive directors and CEO’s direct reports.

In the group’s annual report, it notes that: “All or part of the unpaid STI may be modified or cancelled, and all or part of the unvested LTI may be modified or cancelled. In addition, all or part of the vested LTI may be claimed back.

“Malus and clawback provisions may be invoked for certain material events, including cases of material financial misstatement or gross misconduct on the part of the executive director or direct reports of the CEO.”

If these are invoked, this will be evident in this year’s annual report, to be released in 2024.

(Following the termination, Van Dijk will not be entitled to any performance-related incentives this year.)

The more likely answer?

Far more probable, and less provocative, is that Van Dijk simply lost the support/confidence of Bekker, and by implication the board.

The majority of Bekker’s personal wealth remains tied to the performance of Prosus (and Naspers). Sometimes answers to complicated questions are in plain sight.

Bekker all but admitted this in a call with investors on Monday.

“When you decide on a transition, it’s best to execute that immediately. Because, just think about it, the moment you announce there will be a transition, there will be a search, it’s going to take a few months, and the current incumbent simply loses all power, that’s how companies work. It’s a pointless, unhappy period. So we decided to do it differently, here is a point of transition.”

This still begs the question … why right at this specific moment? Why six weeks from the release of its interim results? Why not then?

Or why not when the group said it would unwind the cross-holding structure?

Surely that was Van Dijk admitting defeat somewhat.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.