Former Telkom group CEO (GCEO) Sipho Maseko was paid a whopping R20 million after resigning from the telecommunications company.
This emerged from the telco’s integrated report for 2022 published today.
Maseko announced his resignation from Telkom in July last year and was replaced by Serame Taukobong.
His tenure was supposed to come to an end on 30 June 2022 but Maseko brought forward his resignation to 31 December.
Maseko had been with the telco for about eight years.
However, in the report, Telkom acknowledges the R20 million windfall to Maseko did not sit well with some shareholders, who questioned the mammoth figure to the former CEO.
Says Telkom in the report: “While shareholders acknowledged that retaining the GCEO is a key objective, they were concerned about the total value of the award (R10 million paid in FY2021 and R10 million paid in FY2022).”
According to the company, the shareholders were also concerned about the lack of rationale for such a large sum being paid to the GCEO.
In addition, it notes, they were concerned that Telkom did not deliver the retention payment as equity and is additional to other variable pay he is eligible to receive.
Responding to the concerned shareholders, Telkom says the combination of a constrained market that drove tough trading conditions with regulatory events pointed to an even tougher outlook for Telkom in 2020 and 2021.
It notes the board considered it to be strategically important to retain Maseko’s services for a minimum period of two years.
According to Telkom, the decision at the time was supported and approved based on the following key reasons:
- The timing of the value unlock strategy, including the restructuring that was under way to facilitate this, together with the significant shifts taking place in the telecommunications space.
- The implementation status of key strategic matters, such as the spectrum auction and optimisation of the business units.
- The competitive environment within which Telkom found itself, with its largest competitors in flux with their leadership.
It explains the retention award was a restricted cash award that vested over a period of time, with 50% paid in FY2021 and 50% paid in two instalments in FY2022.
Telkom says it made a 50% upfront payment to Maseko on 1 April 2020; 25% was paid on 1 April 2021; and 25% on 31 March 2022.
Telkom adds the following conditions were linked to the retention payment:
- Maseko must remain in Telkom’s employment until 31 March 2022. If he resigns during the retention period, he will be expected to repay the gross amount received, which includes the tax portion, up to the exit date/termination date of the agreement.
- The notice period of three months will be enforceable if he resigns, or if his service is terminated by Telkom for any reason other than those outlined in the agreement.
- A malus and clawback clause was included.
“The board remains of the opinion that the right decision was taken to retain Mr Maseko’s service for two years. He remained in an advisory capacity from 1 January 2022 until 30 June 2022 to assist with completing selected strategic matters,” the company says.
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