Rewards aplenty in the firing line
Big bucks mean rejects earn more by leaving
FOR well-paid executives, few things can be as lucrative as being fired.
Although shareholders and policymakers in the US and Europe in particular are increasingly looking at ways to limit executive pay and so-called golden handshakes, many companies continue to richly reward executives when they terminate their contracts.
Often, the termination fee dwarfs the yearly salary and bonuses and leaves executives much better off than they would have been had they been good at their jobs.
A case in point is Thorsten Heins, who was fired from BlackBerry last month after running it to the brink of bankruptcy.
Heins is expected to receive a golden parachute of as much as $22-million (R225-million) to make way for new CEO John Chen, who will earn $3-million a year excluding share options, according to the Financial Times.
Locally, former Avusa (now Times Media Group, owner of The Sunday Times) CEO Prakash Desai received R19.187-million to resign in September 2011 following a public spat with major shareholder Mvelaphanda over a private equity buyout offer.
The golden parachute brought his total pay for the 2012 financial year to R40.125-million.
It dwarfed his total pay of R5.339million in 2011.
Despite having to cut 224 permanent employees, or 31% of its workforce, Port Elizabeth-based Sovereign Food Investments had the cash to pay Mike Davis, former CEO, R8.4-million to quit in August 2011.
His total pay for the six months he worked in the 2012 financial year was R10.4-million — R3.4million more than his pay for 2010 and 2011 combined.
An exodus of nonexecutive directors at RBA Holdings, which develops affordable housing, also led to the resignation of former CEO David Wentzel in September 2012.
He was paid a termination bonus of R1.8-million.
That brought his total pay for the 2012 financial year to R4.36million.
It exceeded his pay for 2010 and 2011 combined.
In the public sector, a handful of senior officials were rewarded quite handsomely to vacate their positions.
Former Broadband Infraco chief financial officer Suren Maharaj, who was one of a number of senior officials to resign from the stateowned enterprise in the first half of 2011, received a golden handshake of R396 000.
At the South African Human Rights Commission, Victoria Maloka, a former head of the human rights advocacy unit, received a voluntary severance package of R429 000.
Danaline Franzman, former legal head of the commission, received a voluntary severance package of R280 000.