Workers Call For Probe Into Multi-Million Rand Payments Made To Cell C Executives

Did Cell C Chairman Kuben Pillay Let His Executives Decide Their Own Remuneration?

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Cell C Campus
Cell C Campus (Photo Credit: Atterbury Properties)

Workers at Cell C have asked the company’s chairman and board to investigate why executives and senior staff were paid hefty bonuses in light of the firm’s poor performance.

A group of workers calling themselves “The Concerned & Frustrated Employees of Cell C” have raised the matter with chairman Kuben Pillay.

Workers have been informed that they will not be paid any bonuses this year because the mobile phone operator had not met its EBITDA 2017 targets. The workers have since found out that the company has paid three executives – led by Cell C CEO Jose Dos Santos – a staggering R219 million.

In a recent letter to Pillay – the Concerned & Frustrated Employees question if the board has relinquished its remuneration role for executives.

“Thank you for your response via the Chief HR Officer (CHO) where we (Cell C Staff) understand the bonus schemes mentioned, however, we would like the response from the chairman and the Board of Cell C as per our letter dated 24 August 2018 was addressed to the Chairman for specific reasons,” the workers wrote in apparent frustration that Pillay did not respond to them directly.

“The decision to pay out bonuses was a board decision hence we are requesting that any decision regarding our demands come from the board.

“We feel going forward, that any response from the CEO’s office or the CHO’s (Chief Human Resources) office, compromises the legitimacy of your response as these individuals are at the centre of the contentious issues raised.”

Last month TechFinancials reported that Dos Santos informed workers that they will not be paid any bonuses or short-term incentive programme (STIP) this year.

CELL C CEO Jose Dos Santos
CELL C CEO Jose Dos Santos

“As you will be aware, April is usually the time of the year that we issue bonuses to staff based on company performance. 2017 was a tough year for the business, with many challenges and changes from a recapitalisation point of view. As a result, the company did not achieve its EBITDA (earnings before interest, tax, depreciation and amortisation) target and therefore STIP bonuses will not be paid,” wrote Dos Santos in his letter to staff.

Now the concerned workers have written a letter to the chairman requesting a full investigation on the funds paid as bonuses to executives and senior staff, bonuses paid to those recepients who did not receive any bonus irrespective of EBITDA not being met, as payment was made to a select few.

Furthermore, the workers demanded in the letter that the company provides them with the financial statements and the board meetings confirming that the company was indeed in dire financial straits.

The workers also threatened to take their concerns to government, civil society and unions if the chairman failed to provide a resolution.

They also threatened to boycott Cell C’s CEO Awards.

“During the bonus payout for the 2017 financial year we were advised that the Company could not honour payments of full bonuses and as such a lesser amount was paid. We were advised that this was due to a tight budget and financial constraints,” said the workers’ letter in part.

“We are constantly being told that Cell C has no funds to replace staff that have resigned or been dismissed, no investment in technologies to assist in our daily functions, no funds for shirts or any extra benefits to staff. As such, the workload then falls onto those of us that remain to ensure work gets done and targets are met. Overall morale at work is inevitably impacted by this.”

Cell C response

In a letter written by Juliet Mhango, Cell C’s CHO, states: “Please be assured that all of the above incentives, schemes and structures received the necessary board and shareholder approvals and are aligned with guidance from the Cell C remuneration committee, based on best practice and proper governance.

“Payments made in terms of these incentive schemes are the subject of an independent audit each year when the information is examined in detail. In addition, all of these amounts are reflected in Cell C’S annual financial statements, in accordance with all necessary legal and internationally recognised reporting standards”.

Mhango further criticised our article published on August 22: “R219 Million Paid To Three Top Execs At Cell C In 2017” stating “the article is riddled with inaccurate information apparently provided by unnamed sources. But to this date, TechFinancials hasn’t received a call or email from Mhango or her media relations team asking us to correct alleged inaccuracies.

Mhango further states that “the total amounts accrued (but not all paid) in 2017 excluding salaries and wages to all staff were as follows:

  1. R651 million for retention and performance bonuses;
  2. R41 million for share-based expense, and
  3. R221 million for the directors and prescribed officers emoluments

“Of the above amounts accrued in 2017, approximately R356 million was not paid in 2017 and will be carried forward to future years when payments fall due under Cell C’s various schemes.”

In this letter, Mhango confirmed that in 2017 Cell C prescribed officers – CEO Jose Dos Santos, Robert Pasley (Chief Strategy Officer), and Tyrone Soondarjee – received R221 million.

She further reduced workers concerns to a simple workers grievance and requested them to follow the company’s procedures for such issues. One wonders if this is not a board issue as remuneration committee that incentivise executives is led by the board.

Mhango sarcastically further stated in the letter that “Colleagues, it is important to not lose sight of our focus and become distracted by sensationalist reporting, rumours or speculation.

“We have a job to do and our combined efforts will realise the benefit of a company that performs well. If the company meets its targets and performs well, you too will benefit through the short term incentive scheme as well as through the Believe Trust and the Believe Phantom Share Scheme in the long run.”

But the letter does not tell workers that executives have already been paid millions of rand and more might be paid in this financial year.

In a follow-up letter to the Chairman of Cell C, the concerned workers wrote: “In the interest of Fairness, Honesty & Transparency, can you please investigate and provide feedback to all staff regarding the below:

  • The mismanagement and dishonesty with regards to bonuses paid to staff.
  • The inability or refusal to replace vacant positions.
  • Compensation to staff regarding the rest of the bonuses to be paid by 30th August 2018.
  • Should the calculation take longer than anticipated; Then give us the remunerate bonus figures that were paid last year in full.
  • We require the company to provide us with the financial statement and the board meeting confirming that the Company is indeed in dire financial straits.

“Once again we implore you to do the right thing and protect the staff that drives the business forward.” – lourie@techfinancils.co.za

5 COMMENTS

  1. I love your writing. You really give context to a story and if Cell C was a government entity the executives will be gone by now. Where is Communications Workers Union? Does it not represent workers at Cell C?

  2. “We have a job to do and our combined efforts will realise the benefit of a company that performs well.” – What a pathetic comment. They are not prepared to pay workers what is due to them. These executives are only interested in making their pockets fatter.

  3. The CEO and his bunch of bandits(executives) need to answer questions put to them Cell C is run like a fruit shop and is being looted!! I have read articles stating that even their franchisee bases were taken away for free. Have to feel for blue label’s share price tumbling they just bought into the wrong company. It will only get worse

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