I am concerned about the longterm benefits of the Absa executives just announced.
Ann Crotty writes in Moneyweb on 17 April “Just days after announcing that its top executives would follow President Cyril Ramaphosa’s example and donate an effective one month’s salary to community support programmes, Absa released details of its latest long-term executive incentive scheme which reveal that the same executives are set to score tens of millions of rands in bonuses.”
Long-term executive incentive scheme
The Covid donations by the Absa executives are significant, but pale against the tens of millions of rands each of them stands to gain from the long-term incentives approved by the board.
These benefits are submitted to shareholders at the forthcoming AGM for a non-binding vote, i.e. whether or not shareholders vote 100% against it, the board’s decision stands.
Absa says the number of shares awarded is fixed with reference to the 20-day volume-weighted average price preceding the grant date, which was April 1. The Absa share price slumped to a 10-year-plus low of R72 on March 27.
According to Mike Martin of Active Shareholder, should the Absa share price does nothing more than to recover to levels seen last year, the value of the long-term incentive payouts to executives will be over R100 million and the deferred awards will be worth R44 million.
This is simply unacceptable and shareholders should vote against those directors who are up for re-election.
Boards must guard against allotting generous longterm incentives to their executives in these trying times. The Covid-19 pandemic has changed the world and it is possible that it will take years for the global economy, and particularly the SA economy, to recover.
Approval of the longterm benefits of Absa executives should have been avoided.
On a similar note we also commented on the decision of Dis-Chem to withhold their rental payments to landlords.