Is R18m paid to ex-Telkom CFO a golden parachute?

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By Gugu Lourie

Telkom ex-chief financial officer Jacques Schindehütte would only get R18 million as a ‘golden handshake’ or so said the country’s biggest fixed-line telephone group’s 2015 annual report.

It is a victory for Schindehütte and a loss for those who wanted him out of the company?

It seems, he won against his detractors.

Looking carefully at his total package, it seems as if Schindehütte was paid a settlement fee amounting to close to R11 million.

That’s a lovely golden parachute for an executive who didn’t work for the company in 2015 or maybe due to accounting standards his pay is only reflecting now.

golden parachute is defined by Wikipedia as an agreement between a company and an employee (usually upper executive) specifying that the employee will receive certain significant benefits if employment is terminated.

Schindehütte was paid R18.8 million, which consist of a R6.6 million guaranteed package, no short-term incentives, and R12.2 million in  fringe and other benefits.

On 2 October 2013, Schindehütte bought shares worth more than R5.9 million as the company’s share price continues to climb and the group prepared to reveal its turnaround strategy.

Sipho Maseko, Telkom chief executive
Sipho Maseko, Telkom chief executive

Then begun his woes.

But he was suspended effective 24 October 2013, pending a disciplinary process. The company didn’t provide reasons for the suspension.

He left the company on 8 August 2014 and the disciplinary process against him was relinquished by Telkom and no reasons whatsoever were provided.

Telkom announced that Schindehütte retired from the board with full benefits and the disciplinary proceedings have been discontinued. Telkom settled the retirement benefit with Schindehütte during November 2014.

Deon Fredericks, Telkom's chief financial officer
Deon Fredericks, Telkom’s chief financial officer

At the time, Telkom said Schindehütte was advised that the R5.9m loan granted to him to buy shares was void and has a fiduciary duty to repay it to the company.

Schindehutte said he would repay the loan.

“The interest-free loan has nothing to do with my suspension as I followed the correct procedure to seek approval for the loan,” said Schindehutte in an interview with Blooomberg news agency.

“I’ve now been told that the company was unable to ratify the loan as they had indicated to the market and I’ve been called upon to repay the loan. I will do that forthwith.”

But Telkom insisted that the loan to Schindehütte was granted in a manner that was inconsistent with the provisions of the Companies Act, making the transaction null and void. The board cannot and did not ratify the granting of the loan.

According to Telkom annual report no shares were allocated to Schindehütte in 2013 as he retired in August 2014.

However, the fringe benefits paid to Schindehütte may include an undefined short-term incentive of R1.2 million and long-term incentive payments of R10.3 million for full-year 2015 and 2014.

Finally, let’s hope the so-called ‘illusive truth’ behind what happened to Schindehütte will be revealed one day.

Sipho Maseko, the CEO of Telkom, was paid R12 million total package in 2015 and Deon Frederick, who replaced Schindehütte received R8.7 million.

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