Golden handshakes given for resolving LCCP issues
JOHANNESBURG - Sasol has said that it regretted the largesse extended to former joint chief executives Bongani Nqwababa and Stephen Cornell that apparently broke trust with its shareholders.
Sasol chairperson Sipho Nkosi told the group’s annual general meeting on Friday that the board acknowledged the criticism on the separation arrangements for Nqwababa and Cornell.
“We profoundly regret the impact our actions have had on the goodwill and trust extended to us by our stakeholders despite the utmost good faith that informed our approach to this matter,” Nkosi said.
“We are reflecting on measures to take to assure our stakeholders of our commitment to restore confidence in the way we implement the company’s remuneration policy.”
Shareholders questioned why Nqwababa and Cornell received golden handshakes of R14million and R21m respectively, despite cost and project overruns at the Lake Charles Chemicals Project (LCCP) in Louisiana in the US.
Executive vice-president for advisory and assurance Vuyo Kahla told the meeting that the golden handshakes were awarded to resolve the LCCP issues.
“Part of that rationale, and most importantly was to ensure that the company could get speedy resolution, ensure there was a termination in order to enable a reset within the company and its leadership, and it assessed other risks that could have been imposed on it by any litigation related to that,” Kahla said, adding that the company would avoid a similar situation in the future.
Sasol committed to a 20 percent sacrifice of board fees, citing the significant challenges facing the company and in acknowledgement of the erosion of shareholder value over the past two years.
However, shareholder activist Theo Botha called for the resignation of the audit committee members for capex overruns at the LCCP.
“The audit committee plays a very important role, they should have paid an oversight role at Lake Charles.
From the last AGM, it seems like they were ineffective. “I think that the audit committee let the shareholders down,” Botha said. “They never performed.”
Board said the 20 percent sacrifice of board fees was not enough given that many of the overseas-based executives were overpaid.
“For them to make a sacrifice of 20 percent is nothing. Twenty percent means nothing to me when considering the role they played,” he said.
“I think what is needed here is better oversight and I believe that the directors who did not perform the role of oversight should resign.”
In May, Sasol announced that management had taken a salary cut of between 10 and 20 percent and there would be no salary increases given the group’s financial woes.
The group said at the time that chief executive Fleetwood Grobler would donate 33 percent of his salary to the country’s Solidarity Fund for three months. It said this would be followed by a further 20 percent pay cut for the next five months.
Activist group Just Share voted against the group’s remuneration policy and remuneration implementation report, chiefly because senior executives were not incentivised to urgently tackle the looming crisis represented by climate change.
Just Share said it believed that Sasol’s remuneration was not linked to ensuring meaningful climate action.