Telkom has defended paying suspended former CFO Jacques Schindeh"utte almost R18.8 million in the past financial year, saying the payments "were in line with the employment contract he had agreed to with Telkom".
Telkom's annual report for the year ended 31 March was released earlier this week and finally confirmed the much-speculated amount paid to Schindeh"utte.
The report showed the suspended CFO was paid a salary of just over R6.5 million in the 2015 financial year despite being suspended in October 2013. He also received around R12.2 million for "fringe and other benefits". Telkom revealed the amount paid included long-term incentive payments for 2014 and 2015, coming to around R10.3 million, as well as over R656 000 for leave owed to him.
Telkom spokesperson Jacqui O' Sullivan says: "Mr Schindehutte took early retirement prior to the finalisation of an internal disciplinary process. The payments made to him were in line with the employment contract he had agreed to with Telkom."
Schindeh"utte's "early retirement" was announced in August 2014 in the midst of a confidential disciplinary process. Telkom never clarified what charges its former CFO faced but his suspension and all disciplinary processes were cancelled once his retirement was announced.
Schindeh"utte denied his suspension had anything to do with a R6 million interest-free loan he took from the company. The loan was used to buy 243 700 shares, just eight days before the operator issued a trading statement indicating earnings would be at least 20% higher when it reported interim results.
Unions see red
The amount paid to Schindeh"utte comes as a slap in the face to unions trying to fight wide-scale retrenchments at the telco. Trade union Solidarity has condemned what it calls a "payment scandal", saying the money paid to Schindeh"utte could have been used to pay the salaries of about 80 technicians for a year.
"Given the massive retrenchment process at Telkom, we are aggrieved that Telkom has squandered so much money that could have been used to keep experts in its employ," comments Marius Croucamp, head of Solidarity's communications industry.
O'Sullivan says retrenchments and payments to Schindeh"utte are two separate issues.
"The decision to retrench is not taken lightly. Telkom is currently engaged in a multi-year restructuring process in order to secure financial sustainability and position the company for future success. Many of Telkom's peers, both in South Africa and elsewhere, are engaged in similar processes to ensure they continue to deliver value in a changing environment," adds O'Sullivan.
Earlier this month, Telkom abandoned a process of forced retrenchments for over 4 000 staff and instead put out an offering to employees to apply for voluntary retrenchment packages and voluntary early retirement packages. This after Solidarity won a Labour Court application that effectively forced Telkom to halt its planned forced retrenchments.
"At [future] meetings with Telkom we will once again warn the company to get its priorities right and to have its employees' interests at heart," says Croucamp.
Wage bill doubles
Telkom's wage bill for executive directors more than doubled in the 2015 financial year, with the total adding up to R39.8 million, largely due to the large golden handshake given to the former CFO. Schindehutte's replacement, Deon Fredericks, received total remuneration of close to R8.7 million, while CEO Sipho Maseko took home a total of R12.3 million. Maseko's salary was a 5.1% increase from the year before, when he took home R11.7 million in total.
When asked if Maseko's salary increase was justifiable, Telkom responded that it uses market and industry benchmarks to ensure employees are remunerated competitively.
"Our remuneration policy is designed to attract, retain and motivate high-calibre talent in a challenging business environment. This is necessary in a highly competitive industry, such as the telecommunication sector, where the growing number of competitors results in fierce competition between companies to secure the best talent in the country," says O'Sullivan.
Telkom's full year results for 2015 showed a 6.2% average salary increase for bargaining unit employees and a 6% average salary increase for management employees.
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