EOH is blasted over execs’ pay
REMUNERATION: POLICY IN NOT UP TO SCRATCH
Review of incentives, both short and long term.
EOH is in the crosshairs of shareholders over executive pay, with an astonishing 65% of them voting against the group’s remuneration policy and its implementation at its annual general meeting on Thursday last week.
The resolutions are nonbinding, but given they failed to achieve 75% of votes in favour (both votes also failed at the last AGM), the group is required to formally engage with dissenting shareholders.
It says it “has already commenced engagement with the dissenting shareholders who have reached out to the company to share their concerns on both the remuneration policy and remuneration implementation report and will continue to do so”.
EOH’s remuneration report discloses precious little about the criteria used to gauge performance on both short- and longterm incentives.
On the former, it refers only to these being “linked to [key performance indicators] delivered annually, measured against objectives and targets”.
In 2019, there were two criteria set. There are no details on how the executives fared against these.
EOH knows its remuneration policy isn’t up to scratch and group chief executive Stephen van Coller surely knows it too.
The group says: “An enhanced focus on remuneration will be prioritised during the upcoming financial year”.
It has enlisted the help of remuneration specialists Vasdex Associates to “review executive and senior management incentives, both short and long term, and redesign the incentive schemes as necessary.
“Several shortcomings were identified in the existing schemes, including that the focus was based purely on share price growth, which lost its relevance in terms of connection to individual performance and, therefore, had limited ability as a retention tool.
“Alongside this, the remuneration schemes were not consistently and transparently performance based.”
A new approach to short-term incentives and long-term incentives would be implemented at the end of the financial year 2020.
Few shareholders would have taken issue with the bonus totalling R14 million paid to Van Coller during the 11 months he has been in the role.
Having been bought out of an existing contract at MTN Group, he joined EOH with a guaranteed payment of R10 million, paid in two equal tranches in October 2018 and October 2019. He was paid a discretionary bonus of R4 million which, with guaranteed remuneration of R5.026 million, brought his total pay to R19.026 million. He was awarded one million share options on joining EOH.
Given the tumultuous year, the fix-it job has been like few others.
As a services business, EOH trades on trust. Goodwill (R1.8 billion), despite this being written down significantly in the past year, remains twice the value of assets.
There was a real risk EOH would collapse. Van Coller’s clear and determined leadership, coupled with a complete overhaul of the board, is arguably the reason why the group is still in reasonable health and why 10 578 employees still have jobs.
Hilton Tarrant works at YFM
In reasonable shape due to Van Coller’s leadership