Absa shareholders are clearly disgruntled with executive remuneration at the banking firm.
Yesterday Absa said it would hold a meeting for shareholders to voice their concerns about the lenders’ remuneration implementation report, after more than 25 percent of shareholders voted against the remuneration implementation resolution at the annual general meeting on Friday.
Absa has been in the public spotlight with corporate governance issues and executive problems recently.
In April it disclosed in its annual report that Daniel Mminele, Absa’s former chief executive who stepped down in April 2021, was paid R30.47 million in a termination agreement with the bank.
Mminele, the lender’s first black CEO, exited citing differences of opinion on strategy with the board, in particular its chairperson Wendy Lucas-Bull, after little more than a year in the position.
Lucas-Bull, who stepped down in March after a nine-year stint, said in her last comments in the bank’s 2021 annual report: “The decision by Absa and former group chief executive, Daniel Mminele, to part ways in April 2021 was regrettable, resulting in a mutually agreed separation that was in the best interest of both parties.”
The bank said for a speedy resolution, the board agreed that Mminele would receive a termination payment that would include good leaver treatment on unvested short-term incentive deferrals and unvested long-term incentives, in respect of which Mminele received cash-equivalent payments.
The bank reported that it had paid Mminele a lump sum that included numerous negotiating factors. The R16.5m was an ex-gratia “by favour” payment, and an extra R4.5m six months’ notice payment on behalf of the termination of his contract. Mminele’s payment also included R5m in place of his 2020 short-term incentives, which had been put back in Absa group shares.
Mminele also received R3.25m on behalf of his 2021 long-term incentive award and R750 000 towards his accumulated leave.
According to Absa, these payments were made after deducting tax and other statutory contributions. The bank said it also contributed towards Mminele’s legal costd totalling R466 000.
Arrie Rautenbach, who succeeded Mminele as chief executive and took the reins of the firm in March, collected R25.2m in 2021. This included a base total cost to company of R7.26m, short-term incentives of R12.5m, and long-term incentives of R3.46m.
Rautenbach also received R2m in other payments, the bank said.
Rautenbach’s appointment as CEO earlier this year was controversial. It earned it the ire of the Public Investment Corporation, the nation’s biggest fund, which said at the time it was “downright disappointed with the appointment and believed that it was yet another missed opportunity for the bank’s board to demonstrate its commitment to transformation”.
Bloomberg reported earlier this month that Absa at its AGM had pledged to diversify its board and senior leadership within two years, after getting censured by investors for hiring a white man (Rautenbach) as its CEO.
“We do realise we’ve regressed” on diversity, board chairperson Sello Moloko said, citing the departure of former board chair Wendy Lucas-Bull and the removal of Punki Modise after she was named interim head of the lender’s Retail and Business Banking division.
Modise had sat on the board temporarily in her role as acting chief financial officer. Absa would seek to demonstrate “significant progress at senior levels within the next 18 to 24 months,” Moloko said.
On the earnings front, however, the lender said this week that headline earnings per share and earnings per share for the six months to June 30 were expected to be more than 20 percent above the comparatives for the first half of 2021.
Absa is not alone in facing fire over its pay policies.
In May, shareholders holding 47.5 percent of Capitec’s shares voted against the remuneration package of R177m paid to its top three executives in the past year at its AGM.