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Johannesburg - Allan Gray, Net1’s second-biggest shareholder, said on Wednesday it notes with outraged the financial settlement claimed by Serge Belamant upon his retirement as CEO.
This comes after Net1 UEPS Technologies said on Tuesday it has agreed to pay its founder and chief executive officer $8m (R105m) and about a 14% premium on his shares after he agreed to step down amid a storm of controversy over a contract it holds to distribute billions of dollars of welfare payments to 17 million people.
Belamant will also be paid $50 000 (R655 500) a month to consult for the company after his early retirement, the company said in a disclosure to the US Securities and Exchange Commission on Tuesday.
READ: Net1 to pay outgoing CEO over R100m
Net1 agreed to buy back over 1 million shares he owns at $10.80 a share. It agreed to allow the accelerated vesting of 200 000 shares and the repurchase of more than 252 000 “in-the-money” stock options at $10.80 a share minus the applicable exercise price per option.
Cape Town-based asset manager Allan Gray said in an emailed statement on Wednesday they were "very surprised that Belamant was able to negotiate such an extravagant deal after such broad public censure and believe that it is unjustified given current circumstances”.
Net1 won a contract in 2012 to distribute welfare in South Africa. Two years later, the country’s Constitutional Court ruled the contract invalid and instructed the South African Social Security Agency (Sassa) to find a new provider. When it failed to do so by March this year, the court allowed the contract to be extended until 2018 under stringent conditions.
Severance payments
“For a number of years we have been concerned about multi-million rand ex-gratia severance payments made to executives and that shareholders are unable to block such payments,” Allan Gray’s chief investment officer, Andrew Lapping, said in the statement.
The asset manager “made the recommendation that material severance payments to executives should be subject to a binding vote by shareholders,” he said.
“As our proposals have not been implemented and we were not privy to the negotiation with Belamant, we regret the settlement reached,” Lapping said.
READ: DA asks Gigaba to probe social grant distributor's R1.1bn profit
Net1 has been accused by human-rights organisations of selling goods and services to the poorest and least-educated South Africans ranging from loans to mobile-phone airtime without explaining the terms and costs adequately and by improperly using information gleaned from its grant distribution activity. It has denied the allegations.
The stock closed trade at $9.41 in New York. It has declined about 41% over the past two years.
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