Vodacom has slammed weekend reports accusing its former CEO, Alan Knott-Craig, of riding a free wave on a R1 million a month salary after his retirement.
The company's spokesman, Richard Boorman, says Vodacom has done everything by the book and there is nothing sinister in Knott-Craig's contract with Vodacom.
Knott-Craig has also denied claims that he has been paid a hefty R24 million since his retirement. “I have a two-year agreement to render services to the Vodacom Group CEO personally, which also restrains me from working in SA. While I cannot disclose my remuneration, my before tax monthly remuneration is significantly less than half the R1 million quoted by the Sunday Times on 14 February 2010.”
Knott-Craig retired as the head of SA's largest mobile operator in September 2008. At the time, Vodacom explained he would be kept on as a consultant to the CEO. Sources close to the situation say the initial contract, which expired late last year, did not include a restraint of trade agreement.
Vodacom has confirmed there is a new contract in place; however, it will not disclose the figure it is paying its former CEO. It has also confirmed that a restraint of trade agreement is now in place with Knott-Craig.
It is likely the company decided to offer Knott-Craig a new contract with a restraint of trade in reaction to the several new cellular opportunities sprouting up across the country, most notably, Telkom Mobile.
Knott-Craig has also hit back at reports that indicate he has done nothing for the company over the last 18 months. “I have, and continue, to render services to the Vodacom Group CEO at his behest, and fund all my own travel and office expenses.”
Only fair
Absa Investment analyst Chris Gilmour says hiring the company's former CEO is not an unusual business practice. “In fact, it is a very common practice and happens all the time, in many industries,” he notes.
According to Gilmour, even if Vodacom was paying Knott-Craig the full alleged amount of R1 million a month, it is still a reasonable salary for a consultant of his calibre. However, Gilmour says it is more likely that Knott-Craig is receiving less than half that figure.
“Just under half a million is about reasonable for what you would pay a normal consultant with his experience,” adds Gilmour.
A restraint of trade agreement would prevent Knott-Craig from going to any other business in his field. “He essentially can't work anywhere else for the next two years; to enter into that agreement, it needs to be an enticing figure.”
The company never released Knott-Craig's actual salary as CEO, since he retired before the company took to the bourse. However, current CEO Pieter Uys received just under R10 500 000 for his work in 2009, according to the company's annual report for 2009.
Other troubles
Knott-Craig and Vodacom have been on the defensive over the last few weeks, with allegations of nepotism hanging over the former CEO's head.
He has denied accusations made by former employees that indicate he abused his position as CEO to benefit his family using Vodacom funds. Vodacom has also defended its former head, saying it found Knott-Craig innocent of all accusations.
Despite the storm surrounding the company, investors seem sure of the company, with its share price staying relatively stable through the controversy. Its share price opened this morning slightly down at R53.78, a 1c drop over Friday's close.
Vodacom expects its first annual report as a publically traded company to be released in June. It is likely the company will disclose the amount it is paying Knott-Craig in that statement.
Share