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Net1 says Belamant pay justified as shareholders forced him out

Company’s pay committee doesn’t see ex-CEO’s deal as extravagant.

Net1 UEPS Technologies’s new chief executive officer Herman Kotze said a severance payment to the company’s founder and former CEO who was criticised by the company’s biggest shareholders was justified because they forced him into early retirement.

Read: Net1 to pay departing CEO Belamant $8m, premium on shares

Net1 agreed to pay Serge Belamant $8 million and about a 14% premium on more than 1 million shares that he owned after he agreed to step down amid a controversy over a contract it holds in South Africa to distribute billions of dollars of welfare payments to 17 million people. Belamant will also be paid $50 000 a month to consult for the company after his early retirement. Net1’s second-biggest shareholder Allan Gray said it was outraged and the biggest investor, the International Finance Corporation, said it was frustrated.

“We have to take cognizance of what they say, but on the other hand it’s as a result of the initial steps taken by them that we’ve ended up in a position where we’ve agreed with Serge that he must take this early retirement package,” Kotze told reporters in Kokstad, on the border of South Africa’s Eastern Cape and KwaZulu-Natal provinces, on Thursday. 

Belamant’s three decades of service was taken into account, as was his income that was forfeited due to his early retirement, Kotze said. Belamant, who was paid $3.6 million in the 2016 financial year, was due to retire in 2018.

Outraged investor

“There are accelerated stock options that had to be taken into account, restraint of trade, as well as the ownership of intellectual property issues,” Kotze said.

Net1 won a contract in 2012 to distribute welfare payments in South Africa. Two years later, the country’s Constitutional Court ruled the contract invalid and instructed the South African Social Security Agency to find a new provider. When it failed to do so by March this year, the court allowed the contract to be extended for 12 months under conditions.

The company has been accused by human rights groups of selling services ranging from loans to mobile phone airtime to South Africa’s poorest and least educated people without fully explaining how financial deductions from their social grants would work. It has denied the allegations.

Read: IFC, Allan Gray frustrated with Belamant’s golden handshake

“Allan Gray notes with outrage the financial settlement claimed by Serge Belamant upon his retirement as CEO of Net1,” the Cape Town-based asset manager said in a statement this week. “We are very surprised that Belamant was able to negotiate such an extravagant deal after such broad public censure, and believe that it is unjustified given current circumstances.”

Net1’s share price has slumped more than 40% in New York over the past two years. The company this week canceled a plan to buy 15% of Blue Label Telecoms because it would have had to issue shares to raise funds and its stock price has fallen.

Read: Net1 caps investment in Cell C at 15% stake

© 2017 Bloomberg

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Why was he “forced into early retirement”? Perchance for the shady dealings with Dept Welfare and Dlamini? If not, then why else? And this justifies a golden handshake of such magnitude – pull another one. It’s rather a payoff to ensure silence or misdirection down the track.

not only that. it is morally wrong and think about the precedent being set for the corrupt government officials.

Let’s see…”force into early retirement”
Is it legal to be “force into early retirement”?

Will this justification to be paid so much hold if the employee is “forced into joblessness” (read:fired)?

Does this early retirement mean he cannot work anymore or only that he cannot for this
company?

Does this justification hold only when an employee is “forced into early retirement”?
Will this “force into early retirement” hold if it’s effected by the board?

Since it’s the shareholders who “forced” him then is it also the shareholders who determined the amount he is now being paid?

Forced into early retirement but kept as consultant??? yoh! yoh! thought this only happens in the public sector.

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