Allan Gray on the war path over $8m Belamant severance
Shareholders kept in the dark over Net1 boss’s multi-million-dollar golden handshake
EMBATTLED Net1 UEPS Technologies’ second biggest shareholder, Allan Gray, yesterday demanded details of outgoing chief executive Serge Belamant’s severance package.
The continent’s largest privately owned investment management company said shareholders had been kept in the dark about the multi-million-dollar package that Net1 had agreed to pay Belamant.
Belamant, a Net1 founder and until recently its mainstay chief executive, managed to secure himself a handsome $8 million (R104.51m) cheque and $50 000 monthly consultancy fee from the company for a two-year period.
Allan Gray chief investment officer Andrew Lapping said the company wanted to know how Belamant negotiated the package.
“Allan Gray notes with outrage the financial settlement claimed by Serge Belamant upon his retirement as chief executive of Net1,” Lapping said.
“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.”
Allan Gray, which had assets under management of R460 billion at the end of June 2016, holds a nearly 16-percent stake in Net1. Net1 won the tender to distribute welfare in South Africa in 2012.
However, the Constitutional Court ruled the contract as invalid two years later and instructed the South African Social Security Agency (Sassa) to find a new provider.
But Sassa failed to adhere to the directive and the court in March allowed the extension of the contract under stringent conditions until next year.
Net1’s biggest shareholder is the International Finance Corporation (IFC), which bough an 18 percent stake for $107m last year. The IFC is a branch of the World Bank.
Yesterday, Net1 defended its decision, arguing that the package was arrived at after extensive negotiations with Belamant.
The company said the package took into consideration factors such as income forfeited due to early retirement, early cancellation of certain restricted stock awards, length of service, restraint of trade conditions and ownership of intellectual property.
It said the board therefore did not regard the package as extravagant or unjustified.
“The remuneration committee met on May 3, 2017, to discuss the early retirement of Mr Belamant,” Net1 said. “The remuneration committee agreed that detailed severance terms would need to be agreed and negotiated with Belamant and proposed that, in relation to any shares of the company’s common stock that would be repurchased from Belamant, the company would pay $10.80 per share, which was 6 cents lower than the closing price on May 2, 2017.”
Allan Gray has in recent months led a shareholder revolt at Net1 after the company was embroiled in the multi-billion saga around the contract to pay social grants to 17 million beneficiaries on behalf of the government.
In March, Lapping said that Net1 should publish a comprehensive statement clearly explaining its response to the allegations of illegal and improper behaviour by its management with regards to the social grants saga.
The asset management firm also warned that if the allegations were not resolved to its satisfaction, it would not hesitate to call a general meeting and attempt to remove the board.
Last week, the board finally relented to shareholder pressure, announcing that Belamant would be stepping down from his chief executive role two years earlier than it was initially expected but would continue to provide consultancy work for the company for the next two years.
Lapping said the firm had been concerned about multimillion-rand ex-gratia severance payments made to executives that shareholders were unable to block.
The IFC yesterday said it was frustrated with way in which the board handled the debacle. The group said while the responsibility for negotiating packages rested with the board, it was concerned with the governance issues at Net1.
Net1 originally won the tender to distribute South African Social Security Agency welfare in South Africa in 2012. PHOTO: DAVID RITCHIE