The Industrial Development Corporation (IDC) has slammed energy and chemicals group Sasol for paying exorbitant separation packages to its joint chief executives and presidents.
The IDC – as one of Sasol’s largest institutional shareholders, with an 8.5percent stake – was exploring its options on how to tackle these golden handshakes.
The multinational petrochemical giant last week revealed that it paid Bongani Nqwababa and Stephen Cornell about R96million in benefits and golden mutual separation packages.
This was while Sasol’s debt profile remains at risk due to cost and project overruns at the Lake Charles Chemicals Project in the US, which have ballooned to almost $13billion (R215.6bn) from the original $8.9bn estimate.
Sasol grappled with debt of R190bn during the year to the end of June, underlying the urgent need to sell non-core assets and do a rights issue to raise funds. During the same period, Sasol suspended its dividends to protect its liquidity.
The company’s share price has fallen nearly 54percent in the year to date.
The IDC’s divisional executive for strategy and corporate affairs, David Jarvis, said the investor was outraged with the manner in which Sasol’s board had failed adequately to consult shareholders on Nqwababa and Cornell’s separation packages.
Jarvis said shareholders were advised they would be informed about the matter at year-end after they raised questions during Sasol’s annual general meeting in November last year.
“The generous mutual separation packages, amounting to an additional R36m above their approved remuneration packages, do not align to Sasol’s operating and financial performance during their tenure,” Jarvis said.
“Taking into consideration the performance of the company, we wish to express our disapproval regarding the quantum of the separation packages. IDC is currently exploring its options in this regard,” he noted.
In its annual report for the year to the end of June, Sasol said that Cornell’s total remuneration was R68.65m and included a R20.8m salary, a R21.65m mutual golden handshake and R1.86m in long-term incentive compensation.
Nqwababa’s total pay package was R27.2m and included a R14.3m mutual separation package, a R8.7m salary and R1.9m in long-term incentive compensation.
Remuneration committee chairperson Mpho Nkeli last week said the board mandated the remuneration committee to agree on the separation terms for the two executives.
She said the committee ensured that the agreed separation packages were in line with market practice for executive separations.
“Both executives were placed on garden leave during the contractual six months’ notice period, and we granted an additional two months’ employment on full salary to Cornell to accommodate his school-going children before their repatriation to the US,” Nkeli said.
Nkeli said the committee agreed on a separation package equal to 12 months’ salary for Cornell and Nqwababa.
Asked to comment yesterday on the IDC’s remarks, Matebello Motloung, Sasol’s group media relations manager, said: “We take note of the IDC’s position and will engage further on this matter.” -BusinessReport