Telkom’s board has defended the full payment of former CEO Sipho Maseko’s remuneration and “retention bonus” for the 2022 financial year, even though he worked in an advisory capacity to complete part of his contract.
Concerns about his remuneration were raised by shareholders at Telkom’s annual general meeting on August 21, where they voted 80.06 percent in favour of the remuneration policy and only 65.4 percent in favour of the implementation report.
The group, which has, subsequent to its March 31, 2022 year-end, become the target of a full buyout offer by MTN, said in its 2022 integrated report released yesterday that in interactions with disaffected shareholders, including the Public Investment Corporation, after the annual meeting, the shareholders had indicated that while retaining the CEO was a key objective, they were concerned about the total value of the award (R10m paid in 2021 financial year and R10m paid for 2022).
Shareholders were also concerned about the lack of rationale for such a large sum being paid to the CEO. They were also concerned that Telkom did not deliver the retention payment as equity and was in addition to other variable pay that Maseko was eligible to receive.
The group said in response in the report: “The board believes that the right remuneration decisions were made, but that our disclosures regarding the rationale behind our decisions could be improved.”
RG Tomlinson, the chairperson of the remuneration committee, said the board had considered it to be strategically important to retain Maseko’s services for a minimum period of two years due to the outlook of tough trading conditions and industry changes ahead.
The term of the retention bonus was that Maseko had to remain in Telkom’s employment until March 31, 2022, and if he resigns during the retention period, he would be expected to repay the gross amount received, which includes the tax portion up to the exit date/termination date of the agreement.
Maseko had remained on in an advisory capacity from January 1, 2022 until June 30, 2022, to assist with completing selected strategic matters. Because he remained in an advisory capacity, he technically remained in the employ of Telkom.
The integrated response does not address the shareholder concern about the retention payment being in cash, not equity.
BUSINESS REPORT