Blue Label executives take a pay cut

Executives at JSE-listed technology group Blue Label Telecoms took a pay cut in the last financial year after failing to meet a number of targets.

Blue Label’s recent performance has been hampered by its investment in Cell C, in which it holds a 45% stake. The company said in September, trading losses and debt problems at the operator were the reason for its R6.6bn loss for the period, more than double its market capitalisation of about R2.47bn.

In its latest annual report, released on Tuesday, Blue Label said the board and management were “extremely disappointed in the performance of Cell C and, as at 31 May 2019, our entire investment into Cell C and our exposure in the SPV1 and 2 structures, was written down to zero”.

Its remuneration report shows that compensation for the company’s top executives comprises a number of factors, most notably short-term and longterm incentives, and performance bonuses.

The total remuneration of joint CEOs Brett and Mark Levy, who each received R23.9m in 2018, declined 40%. They were paid R14.3m each in 2019 with a base salary of about R9m.

In terms of short-term incentives, the company said it did not achieve the levels required from its predetermined targets for growth in core headline earnings per share (HEPS).

With core HEPS of 135.62c in 2018, this had been targeted to grow 14.5% but actual performance reflected a 325% decline, resulting in a headline loss per share of 304.77c in 2019.

“As a result thereof, as well as the executive directors electing to forfeit bonuses for the nonfinancial targets, no short-term incentive bonuses were paid to them,” the company said.

No short-term bonuses were given in 2018 but in 2017 the Levy brothers received as much as R7.8m each in such incentives. The company’s three top executives received a total of R2.143m as they had been able to grow core headline earnings per share over a three-year period.

For the year to end-May, Blue Label executives did not qualify for an outperformance bonus due to the decline in the share price, the company said. The share price on May 31 2018 had been R11.80, with the target share price at the end of the period set to about R14.16. The share price as at May 31 2019 was below that at R3.78.

Executives did not receive this bonus in 2018 and 2017.

Since June, Blue Label’s shares have lost 34.94% of their value. It closed at R2.70 a share on Tuesday.