African Dawn Capital (Afdawn) has ordered the directors booted from its board in early October to return the bonuses paid to them - a move one analyst said could be precedent-setting in corporate South Africa.
The listed financial services group said the bonuses paid to chief executive Marius van Tonder and chief financial officer Connie van Nieuwkerk "were not earned" and should not have been paid.
The directors were ousted at an annual general meeting over alleged irregularities around the provisional liquidation of Afdawn subsidiary Allegro.
The board, under the new chairmanship of Robert Emslie, said Van Tonder was paid a R4.4 million bonus in the 2009 financial year, while Van Nieuwkerk received R1.3m.
Letters of demand for repayment of the bonuses, in full, have been issued to Van Tonder and Van Nieuwkerk. Emslie said Van Tonder had agreed to forfeit his bonus and had no claim against the company. According to Emslie, Van Nieuwkerk had been given seven days to repay the bonus. Failure to do so would result in legal action being taken against her.
The board said bonuses paid to Van Tonder and Van Nieuwkerk during the period were based on 2008 financial results that were not achieved. Van Tonder resigned from the board after being ousted by shareholders nearly two months ago.
Yesterday, Afdawn confirmed that Van Tonder had resigned as chief executive with effect from November 1, but would remain with the company until February 28. He would be paid his salary until then, but would not receive any further payment.
The board also terminated the contract of De Wet Vivier, the chief operating officer, with immediate effect. It was in discussions with Johnny Ramasehla, the deputy chief executive, regarding the termination of his contract too.
The moves on the bonuses came after the board conducted an in-depth review of the remuneration of Van Tonder, Van Nieuwkerk, Vivier, Ramasehla and non-executive director Steven de Bruyn. It found nothing untoward with the remuneration of De Bruyn.
Johan de Kock, the head of equity research at Metropolitan Asset Managers (MetAm), said recouping bonuses and terminating contracts of people involved would set a precedent in the corporate landscape. "These guys could have already spent these bonuses. This move would make sure that executives do not overstep their mark," De Kock said.
Afdawn's revenues for the six months to August plummeted from R307m to R76m, while profit from operations dropped from R116m to R20.8m.