Former Exxaro CEO’s pay slashed by a third after suspension, resignation

The former CEO of Exxaro Resources, Nombasa Tsengwa – who resigned with immediate effect on 5 February after being suspended by the group in December last year – received total remuneration of just R9.6 million in 2024.

This compares to the total remuneration of R30.2 million she received in 2023, two thirds of which was in the form of short-term incentives (STIs) and long-term incentives (LTIs).

Tsengwa was suspended pending the outcome of an independent investigation by ENS into allegations relating to workplace conduct and governance.

Moneyweb previously referenced a Sunday Times article published days before her suspension that cited anonymous sources who said Tsengwa’s intimidating management style had contributed to the departure of as many as nine executives.

One of the nine who had allegedly resigned or been suspended by the former CEO said working under her leadership had been the “the worst time of my career at Exxaro”.

Read more

Exxaro CEO steps down with immediate effect

Tsengwa approached the Gauteng Division of the High Court in an urgent bid to have her suspension hearing fast-tracked. The case was struck from the roll as it was deemed not urgent.

ALSO READ: Exxaro CEO steps down with immediate effect

Still-big money, little money, forfeited money

She practically only received her R9.55 million of guaranteed pay, including her basic salary, benefits and allowances (such as travel), and retirement fund contributions.

On top of this, she and financial director Riaan Koppeschaar also received a tiny “recognition payment” of R4 260.

This comprised R2 760 linked to targets for the miner’s lost time injury frequency rate and a further R1 500 for a fatality-free year.

The group notes that although Tsengwa’s shares were unvested at year-end and valued at a total of R54 million “at the time of publication” of the group’s annual report, her “STIs and LTIs are forfeited”.

Due to the fact that Tsengwa had been suspended and then resigned from her position, she would ordinarily no longer be eligible for any payments and/or shares under either long-term or short-term incentive plans.

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No notice period, no notice pay …

It is unlikely the former CEO will be paid any once-off fee, such as a mutual separation payment or notice pay precisely because she resigned.

This is markedly different from the typical departure of CEOs of JSE-listed firms, which tend to have some sort of mutual separation agreement attached – as in a ‘negotiated’ resignation.

These are only made public in the following year’s accounts, as they take some time to negotiate and finalise. Companies use this to their advantage to avoid having to disclose separation payments close to the time of the executive’s departure.

A good example of this would be Kenny Fihla, who quit a senior executive position at Standard Bank to take over at Absa.

Based on precedence, executives are paid sign-on bonuses in lieu of long-term incentives forfeited.

This was the case in Ralph Mupita’s appointment at MTN Group (he was previously at Old Mutual), Jason Quinn’s appointment as CEO of Nedbank Group (he was FD at Absa), and now with Fihla’s appointment at Absa.

Clawback?

Interestingly, Exxaro says in its remuneration report (technically its ESG report) that it will review its malus and clawback policies in 2025.

These allow it to risk-adjust awards already made, as well as recover amounts already paid, if necessary.

Currently, clawback is applicable for a period of up to 36 months.

It can implement either of these should an employee’s actions result in material damage to the business, cause it to suffer a material financial loss, or “misbehaviour or material error by a participating employee [in its incentive schemes]”.

At the time of her resignation, the chair of the board, Geoffrey Qhena, said: “We have accepted the resignation of Dr Tsengwa. The board thanks Dr Tsengwa for her years of service and wishes her all the best in her future endeavours.”

Remarkably, it repeats that second line – and only that second line – numerous times across its reporting suite, which was published on Tuesday.

Of its 12 executive directors and prescribed officers, two (including Tsengwa) resigned and forfeited their STIs, while another, Kgabi Masia, the chief coal operations officer, was on precautionary suspension as per its report.

This article was republished from Moneyweb. Read the original here.