Peter Moyo lost out on R68.4 million in share options when his employment at Old Mutual was controversially terminated over an irreconcilable conflict of interest last year.
Just over R13 million of the former CEO’s options were deducted from his 2018 remuneration package, previously valued at R50.5 million but restated to R37 million in the group’s latest annual report.
During the insurer’s AGM on Friday Itumeleng Kgaboesele, chair of the remuneration committee, assured shareholders that Moyo had not received any termination benefits and none were under consideration. Moyo’s total remuneration package in 2019 was R10.2 million, which included just over R1 million as payment in lieu of leave.
The group’s annual report reveals options that had been issued to Moyo as part of his long-term incentives in 2017, 2018 and 2019 – which had been due to be taken up in subsequent years – lapsed when his employment was terminated.
Moyo is also facing a hefty legal bill following the high-profile court action he took against Old Mutual after he was suspended and then fired by the company. To date judges have awarded cost orders against Moyo in two of the cases.
Old Mutual chair Trevor Manuel told shareholders on Friday that the board could not yet say what the full cost of last year’s legal battle with Moyo had been, as the matters had not yet been finalised. “There are two parts to what it costs, on the one hand no company wants to be in the press for reasons of litigation but it was a set of circumstances we found ourselves caught up in.”
Manuel said the legal battle was not something the board chose: “We couldn’t abandon it because we knew we stood on very firm legal grounds … the initial decision to suspend and then terminate the employment of the former CEO was done on very very firm ethical grounds.”
The group’s legal counsel Craig McCloud added that once the legal battles are finalised: “We will proceed with steps to recoup our costs.”
Guarding against repetition
And so for the second year in a row the dark shadow of the former CEO hung over the insurer’s AGM with much of the discussion between the board and shareholders related to the “Moyo debacle”.
Concerned investors were keen to know what steps had been taken to ensure there would not be a repetition of the court battle that dominated media coverage of the group for much of 2019.
“The last year was very very difficult for all of us and I’m sure nobody, not a single member of this board, would want to relive the difficulties we lived through during that period,” said Manuel. He explained that the current Old Mutual board had been appointed in 2017 and had inherited the Moyo governance issues.
“Apart from maintaining a committee called the ‘related parties transaction committee’ this board will make very sure there is in fact a very clear separation between the interests of employees and directors and those of the company.”
The group’s lead independent director Peter de Beyer told the meeting that Old Mutual had made an investment in Moyo’s company, NMT, years earlier as part of its commitment to black economic empowerment.
“When we recruited him as CEO [in 2017] we were very mindful of the potential conflict. At that stage our view was that NMT was a reasonably mature entity and that the special provisions we put around managing that conflict would be sufficient.
“With the benefit of hindsight that did not prove to be the case but this is a special circumstance and not one likely to be repeated,” said De Beyer.
“Certainly,” he added, “in terms of ensuring that all the related-party interests of directors and employees – particularly senior employees – that is well in hand.”