Old Mutual is seeking legal advice about recouping a portion of incentive bonuses paid to sacked CEO Peter Moyo, in a move that could leave the former boss of the SA insurer seriously out of pocket.
Moyo was fired in June, due to a breakdown in trust and conflicts of interest.
Other than losing out on at least R31m because he is no longer employed by the company, he may have to pay back a portion of the R70m in performance incentives he was awarded since his appointment as CEO of Old Mutual Emerging Markets in June 2017.
"We have terminated Mr Moyo’s employment on notice, as provided for in his contract of employment," Old Mutual spokesperson Tabby Tsengiwe told Business Day.
"There are no other terms or special conditions but we do note that payments made under incentives schemes are subject to claw-back in certain circumstances and we are therefore seeking legal advice on this aspect."
When Moyo was suspended in May, Old Mutual chair Trevor Manuel said the move was not due to poor performance.
Vesting of R31m of long-term incentives was tied to Moyo’s continued employment at the insurance group. The additional R39m of incentives were performance-related and are expected to be at the centre of negotiations between the two parties or the legal battle being threatened by Moyo’s lawyers.
Moyo’s lawyer Eric Mabuza said that he was not available to discuss the matter with Business Day.
Policy contravention
Mehluli Mncube, who represents five pension funds that are invested in Old Mutual, told Business Day that paying out the long-term incentives would be a contravention of the group’s remuneration policy.
He said he voted against implementation of the remuneration policy at the AGM in May because it conflicted with the policy in relation to the separation of bonus payments.
Nearly 70% of shareholders voted against the remuneration implementation report at the annual meeting and 46% voted against the remuneration policy.
Moyo was appointed CEO of Old Mutual Emerging Markets in June 2017 and for the six months to end-December 2017 was paid R15m guaranteed remuneration.
The pre-listing statement, issued ahead of Old Mutual transferring its primary listing to Johannesburg in 2018, confirms that the R15m was only a small part of the total he was awarded in 2017.
"The sum of all payments and face value of all long-term awards made during the 2017 financial year was R61.9m," according to a note in the prelisting statement.
Labour lawyer Andrew Levy, founder of Andrew Levy and Associates, said executive remuneration and specifically long-term incentives were not governed by labour law but contract law.
Levy said that under labour laws, Moyo could have argued that he performed as required until he was fired and therefore he was entitled to the incentives, at least on a pro rata basis.
However, under contract law such a claim is dependent on what his contract of employment said.
"One can’t say without seeing his contract of employment whether he will lose those incentives or not.
"Usually there are various provisions relating to a ‘bad leaver’ when it comes to incentives," Levy said.
The problem was there was no standard definition for a
bad leaver.
"It all depends on what the contract the person signed says," he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.