Stock Talk: No ordinary windfall for Mr Price brass

It seems it's not just analysts who reckon the Mr Price share price is a bit steep.

In recent weeks, the two founding directors of the group have offloaded shares worth almost R500-million.

In the past week alone, Laurie Chiappini and Stewart Cohen, who are now joint honorary chairmen of the retailer, each sold almost R150-million worth of Mr Price shares as the price reached all-time records and perched on what seems an unsustainable price:earnings ratio of over 30 times.

Senior executives have also been taking advantage of the steep market valuation to sell share options they exercised.

The company has produced excellent results consistently for more than two decades and its recent interim figures reflected more of the same. Despite its performance being ahead of competitors and its outlook remarkably bullish, analysts seem cautious about its ability to sustain this growth.

Chiappini and Cohen's heavy selling started in mid-December. Just a week before Christmas, they each sold R87.6-million worth of shares.

This was apparently not sufficient to cover their Christmas and year-end expenses, so they both piled back into the market last week to cash in another R150-million worth of shares. This brought their total share sales since mid-December to around R240-million apiece.

Mr Price's chief financial officer, Mark Blair, says this flurry of selling followed the vesting in November of share options that had been awarded as part of their remuneration.

Local executives have shown a far greater propensity than their foreign peers to sell their share awards as soon as they vest. This is despite the fact that options are awarded in an effort to align executives' interests with those of shareholders.

With regard to the honorary chairmen, Blair explains that the two men remain heavily invested in the company and that their sales were "part of an asset diversification".

One of the few public comments attributed to the media-shy founders is Cohen's description of Mr Price as a place "where ordinary people do extraordinary things".

Also, it seems, it's the place where ordinary people secure extraordinary rewards.

Naspers share sales

Also an active seller over the festive season was Naspers's former finance director and current non-executive director, Steve Pacak.

On December 24 - who was paying attention? - Naspers announced that Pacak had sold 15000 shares on December 18, valued at R21.8-million. In the first week of January, Pacak sold another 10000 shares for R15-million.

Pacak has been one of the few Naspers executives to sell these enormously valuable shares. It is significant that his selling started only after he retired from an executive position.

The recipients of Naspers's share options must never have imagined that they would secure such enormous rewards for their executive efforts.

And, even more than the Mr Price team, the Naspers executives can attribute a significant portion of the enormous wealth to the China story.

These lucky executives never have to work another day in their lives, and nor do their children or grandchildren.

China

Talking about China, revelations of its "slowing growth rate" suggest the country has entered a new chapter, and the next few years will be as fascinating as the last several.

It is, of course, ridiculous to think of a growth rate of 7.4% as "slow" but everything is relative. China has long been likened to an elephant on a bicycle - as long as the bicycle is moving fast, the elephant is secure. It's when the bicycle slows down that the elephant is in real danger of falling over.

Shareholder meetings

The highlights of the coming week's corporate agenda are without doubt tomorrow's double-header of shareholder meetings at cement giant PPC and furniture maker Steinhoff.

PPC, which provided us with a barrel load of entertainment last year, looks set to continue to play this role.

The six new "most popular" directors who are elected on Monday must settle into their positions on the board while the board considers what to do about the rather dramatic merger proposal received from Afrisam last month.

Few PPC insiders were overly surprised by the Afrisam move. It has apparently been a subject of boardroom discussion for some time, largely due to the influence of the Public Investment Corporation, which holds more than 60% of Afrisam and 12% of PPC.

It is unlikely that Steinhoff's shareholders will block the proposed bid to acquire Brait's stake in Pep. Either way, the meeting is certain to throw up some interesting discussions.