Stephen van Coller. Picture: TREVOR SAMSON
Stephen van Coller. Picture: TREVOR SAMSON

EOH, whose shares rallied over a fifth on the news that the IT group had named Stephen van Coller as CEO, has refused to disclose whether it is paying the former Barclays and MTN executive a sign-on bonus, or what his remuneration will be.

While analysts applauded Van Coller’s appointment, effective from September 1, they do not believe it will come cheap for the company, which has had a torturous 18 months on the bourse and whose financial health and governance practices have been the subject of much scrutiny over the past year.

Van Coller left Barclays Africa in 2016 to join MTN and has worked as an executive in its strategy, mergers and acquisitions and business development units. In 2017 he pocketed R19.5m in salary, bonus and benefits.

Sweetened  deal

"I’m sure EOH would have had to sweeten the deal considerably for him to have left such an attractive position at MTN," said Nadim Mohamed, partner and analyst at First Avenue Investment Management.

On its own, Van Coller’s pay at MTN for the year ended December 2017 is only slightly less than EOH’s entire executive and nonexecutive salary bill of R21.9m for the year to end-July 2017. Outgoing CEO Zunaid Mayet was appointed in May 2017 to the top job, and to end-July earned R553,000 in base pay, with R477,000 more in share-based payments.

Mayet, who will head EOH’s Nextec division when the group splits into two operating pillars, said: "I don’t think his reasons for joining EOH were financially motivated. Rather, joining and leading the largest listed technology group on the continent was a pretty compelling proposition."

In June, EOH revealed that its new CEO was "highly regarded, with a strong background in corporate finance, investment banking and technology", but Van Coller’s name appeared to take many by surprise.

An accountant, Van Coller headed Barclays Africa’s corporate and investment banking division for seven of his 10 years with the bank.

Van Coller was not available for comment at the time of going to press.

As CEO of EOH Holdings, Van Coller will oversee what will become two independent businesses — the EOH-branded IT division and the industrial technology division, Nextec.

He will also have to deal with lingering fears over EOH’s business practices, following allegations of corruptly awarded public sector work.

Mohamed is wary of EOH’s financial health and said the industrial solutions business was "sucking up so much working capital that we wonder if it will ever generate meaningful return on shareholders’ capital. It’s testament to bad capital allocation."

For the six months ended January, EOH’s earnings fell 24% to R316m.

First Avenue, once a long-time shareholder of EOH, dumped its entire position at the beginning of 2018, "because of the way they handled their PR mess and the corruption allegations against its subsidiary, Forensic Data Analysts (FDA)".

"It was terrible and highly unprofessional," Mohamed said.

"We suspect that they lost the plot in terms of governance as they expanded aggressively into the public sector through acquisition. The lack of disclosure around the issues with FDA, together with the closing of sizable margin calls by directors, destroyed our ability to trust management. To date, none of these directors have been held accountable for these actions."

EOH’s share price closed 21.56% higher at R42.79 on Thursday, giving it a market capitalisation of about R6.5bn.