Boardroom tails
ANN CROTTY: MTN’s perverse incentives
Bad management pays off for top brass
The remuneration report of MTN introduces us to yet another problem with executive pay. It’s a sort of executive remuneration variation on moral hazard. In November 2015, Phuthuma Nhleko was parachuted back into the MTN hot seat to deal with the huge fallout from a multibillion-dollar Nigerian fine. For his impressive contribution to cutting the fine to US$1.7bn, from the initial $5.2bn, Nhleko received R72m in 2016. Included in that was the R30m he was paid for just agreeing to the gig. Then there was the ex gratia payment of R38m. And, as if that weren’t enough (a word without meaning in the executive pay world), bizarrely the remuneration committee thought its now executive chairman should also receive R4m in nonexecutive fees.And it doesn’t end there. Nhleko is set to reap huge returns on whatever share options he was awarded during 2016, when the share price was floundering. Of course all the other shareholders will also benefit as the scandal-free share price recovers to the l...
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