If the four-month-long dust-up between Old Mutual and its axed CEO Peter Moyo continues with him not being reinstated, he is happy to walk away from the insurance group with a R250 million payout.
For the first time, Moyo has revealed an amount he is claiming for damages against Old Mutual since he was fired by the insurance group on June 18, following a “breakdown of trust” between him and the board, chaired by Trevor Manuel.
This prompted Moyo to sue Old Mutual for unfair dismissal. The high court in Johannesburg has twice ordered that he should be temporarily reinstated as CEO.
The R250 million claim for damages is contained in Moyo’s court papers that he served to Old Mutual on Friday for the second leg of his lawsuit, wherein he seeks to declare the non-executive directors, including Manuel, delinquent.
In this process, Moyo is also claiming damages from Old Mutual, saying his high-profile sacking from the insurance group has ruined his reputation and that he would probably “never get a job” in corporate South Africa.
Old Mutual spokesperson Tabby Tsengiwe says the insurance group still believes it was correct to dismiss Moyo, adding that it will defend against his claim “vigorously”. She says the R250 million claim is in addition to the R35.5 million he received for “doing the job” and the R4 million paid over his six-month notice period.
Moyo’s first prize would be to return to Old Mutual and fulfil his CEO duties; the R250 million claim is an alternative remedy if he is not reinstated. “The number [claim] comes into play if I don’t get reinstated,” Moyo told Moneyweb. “My primary claim is not money but to be reinstated.”
Moyo is claiming for contractual damages because Old Mutual fired him without offering him a disciplinary process – breaching the terms of his employment contract with the insurer. His legal team believes the claim against Old Mutual is in delict, a legal concept for intentional negligent or breach of duty of care that inflicts loss or harm.
At face value, a R250 million claim is extraordinary. After all, it is the equivalent of the unlawful spend on former president Jacob Zuma’s Nkandla home upgrades.
However, Moyo maintains that he would have been paid the amount if he had served the remaining four-and-half years of his employment contract with Old Mutual. He adds that the amount is also linked to his total remuneration package, which includes long-term and short-term incentives that are tied to his continued employment at the group since his appointment as CEO in June 2017.
In 2018, Moyo’s total compensation shot up by 32% to R50.5 million.
The biggest contributor was a R15.4 million incentive awarded to him for being part of a team that completed the split of Old Mutual into four financial services businesses, through what was called a managed separation.
Apart from his R8.4 million annual salary, Moyo has long-term incentives including Old Mutual shares worth more than R47 million at Wednesday’s close of R19.42 a share. He was also awarded additional long-term share-based incentives worth R12.6 million in March 2019.
The long-term incentives have a lock-in period up to 2022, meaning that Moyo would have to be employed at the insurer for the next three to four years to enjoy these benefits.
He has other deferred short-term incentives, including performance bonuses, that are worth about R2 million.
In total, his long- and short-term incentives are worth more than R60 million. When his annual salary is included in his total incentives, Moyo says he would have been naturally paid a figure close to R250 million by Old Mutual to serve his entire employment contract.
Labour lawyer Andrew Levy, founder of Andrew Levy and Associates, says although he finds Moyo’s R250 million claim extraordinary, he might use the figure as an opening negotiation position with Old Mutual.
“It might be his opening position and then his team might get the figure down to R100 million and R80 million. I can’t see any basis for getting to the figure [R250 million] unless Moyo has huge share options and takes the view that under his stewardship the share would double in value,” said Levy.
Informing Levy’s view is that if Old Mutual decided to settle with Moyo, it might revert to his fixed-term employment contract, which might set out ways to determine the value of his long-term benefits, and tie it to his ultimate settlement.