Cell C has confirmed that three of its top executives paid nothing for 15.3 million shares transferred to them when the company listed on the JSE in November. Chief executive Jorge Mendes alone received 7.65 million shares, worth about R203 million at the R26.50 listing price, chief financial officer El Kope and chief of staff Rachael Ayo-Oladejo received 918,000 shares each, worth about R24 million apiece, TechCentral reported after putting the figures to the company directly.
The shares came from The Prepaid Company (TPC), the Blu Label Unlimited Group subsidiary that still owns 49.5% of Cell C, as part of a 15.3 million-share “management structure” equal to 4.5% of the company. “The executives did not fund the acquisition, and no company or shareholder loan was involved,” Cell C said. A further 5.8 million shares, worth about R154 million, went to prescribed officers who are not directors, bringing the total allocated for nothing to 15.3 million shares.
Long vesting, but no cash paid
The shares cannot be sold until they vest: 60% over an average of about 3.3 years and the rest over about 5.3 years, Cell C said. Until then they sit in a broking account in Cell C Holdings’ name. Mendes has also bought shares on the open market since the listing, 52,187 at R23 on 17 September and 740,000 at R26.50 on 21 September, lifting his total holding to about 8.44 million shares. The shares he actually paid for make up only about 9% of his current stake.
A bonus paid despite a missed target
The transfer sits alongside Mendes’s pay for the year to 31 May: R29.3 million in total, including a R11.96 million cash bonus, even though Cell C missed the profit target that governs its short-term incentive scheme. That incentive was tied to “controllable” EBITDA, excluding the handset business Cell C acquired during the year. Against a target of R2.25 billion, Cell C delivered R2.11 billion, 94% of target, producing a company multiplier of 76%. The board’s remuneration committee rated both Mendes and Kope as having “exceeded expectations” and applied an individual factor of 125%, lifting their bonuses to more than 90% of target. Kope’s bonus was R4.28 million.
Asked what the 125% rating was based on, Cell C pointed to the executives’ “leadership in delivering the successful listing”, repositioning the company for growth, “achieving profitability for the first time in many years”, retaining key talent and building a high-performance culture. That profit figure owed much to the listing itself: assessing the same year for its own incentive scheme, Blu Label’s own remuneration committee stripped R3.02 billion of restructuring, recapitalisation and listing items out of Cell C’s R4.16 billion net profit, leaving a normalised profit of R1.14 billion once those one-off gains were removed.
Staff get single digits, the board gets double
Mendes’s guaranteed pay of R14.8 million rises 4.5% to R15.4 million for the current year. Non-executive directors are in line for fee increases of as much as 17%, with the basic board retainer rising 11% to R500,000, against staff increases of 5% to 6%. Cell C said directors’ fees had not risen in more than three years and that the proposed increases followed a market benchmarking exercise.
The disclosure comes in the same week we reported on MTN’s IHS Towers buyback getting conditional approval tied to SMME access and on fibre operator consolidation among Frogfoot, Octotel and MetroFibre, both a reminder that South African telecoms is going through a wave of deal-making and listings. Cell C’s own numbers show the trend extending to executive pay: a company that only returned to profitability once one-off listing gains are counted is still paying its top three executives millions in shares they did not buy and bonuses rated as exceeding a target the company itself missed.
We also reported this week on the JSE publicly censuring AngloGold Ashanti over a delayed earnings disclosure, a reminder that newly and recently listed companies on the JSE face real scrutiny over governance and disclosure, scrutiny that extends to how executives are rewarded, not only when they report.
