Jooste: repay the loot
ROB ROSE: Markus Jooste’s R286m windfall
Over 15 years, Steinhoff’s CEO has scored R492m in salary and bonuses. If he messed up, shareholders must reclaim some of that windfall
Most CEOs get rich by holding a large stake in their company, which then grows in value — as Koos Bekker has done at Naspers. But in Jooste’s case, he’s made a packet in salary and bonuses, alongside his shares in the floundering furniture retailer.
Jooste’s total pay, Financial Mail calculations show, amounted to a staggering R492.7m over the past 15 years, including R212m in "bonuses".
The heftiest chunk of this — R286m — was paid to him in just the past three years. Now, that’s also the time period in which Jooste’s inner circle allegedly stitched together some of the shady deals overseas (in Germany and Switzerland).
These deals, according to insiders who spoke to this magazine, are the reason Deloitte refused to sign off Steinhoff’s financials for the year to September 2017. They are at the core of the "accounting irregularities" that led to Jooste’s resignation.
But Steinhoff Africa Retail (Star), which was spun out of Steinhoff, did manage to release its audited figures two weeks ago. Thanks to Star, we now know that for the year to September, Jooste walked away with R121m — R75m of which was a bonus.
Now, that is degrees more than was paid to CEOs of bigger JSE-listed companies, including Anglo American’s Mark Cutifani (R68.2m), Naspers’s Bob van Dijk (R28m), FirstRand’s Johan Burger (R35.5m) or Standard Bank’s Sim Tshabalala (R30.9m).
Of course, you could argue that Jooste, as a shareholder in Steinhoff (68.9m shares), has also felt the pain from its 91% share price plunge in recent weeks. It has meant, in tangible terms, that his stake in Steinhoff has fallen by R3.5bn to about R320m. That’s a remarkably soft cushion — but, still, it’s not every day you lose billionaire status with such giddying speed.
So what can be done to ensure accountability if, as it seems, Jooste did some bad things?
Business Leadership SA CEO Bonang Mohale says if wrongdoing at Steinhoff is proven, shareholders should claw back bonuses
Certainly, accountability won’t be coming from the criminal authorities. The irony of President Jacob Zuma’s calculated crippling of the National Prosecuting Authority (NPA) is that today, when it would desperately suit him to put some of the more morally flexible "agents of white monopoly capital" behind bars, the NPA just doesn’t have the nous any more.
But there is another way to ensure accountability. If Jooste misled Steinhoff’s board, there’s precedent for any new board — or investors — to claw back, at the very least, the bonuses paid to him.
This might seem like a novel approach in SA, but it’s almost de rigueur in investment circles overseas.
In October, the UK Automobile Association tried to claw back £1.2m from former executive chairman Bob Mackenzie for not disclosing an "altercation" he’d had with a member of the public. (And the Steinhoff case, you’d have to say, is a tad more serious than a brawl on the side of a highway.)
Perhaps a better comparison would be with the US’s second-largest bank, Wells Fargo, which became embroiled in a scandal last year when it emerged that its staff, under acute pressure to sign up new customers, had conjured up 2m fake accounts.
In April, Wells Fargo’s board demanded that executives repay US$75m in bonuses — including the $28m paid to the bank’s former CEO, John Stumpf.
Business Leadership SA CEO Bonang Mohale says if wrongdoing at Steinhoff is proven, shareholders and the board should "absolutely" claw back bonuses.
"Bonuses are performance based. If you perform, you’re eligible for a bonus. But if it turns out you got it through illegitimate means because the numbers were inflated, for example, you should forfeit it," he says
A few years back, Public Investment Corp boss Daniel Matjila said the bonuses paid to executives at construction companies should be clawed back, after it emerged that they’d rigged tenders by R1.46bn. Predictably, it didn’t happen.
So why hasn’t it happened before in SA? Mohale has strong, if entirely sensible, views on the subject: "Because most boards and shareholders are too petrified to demonstrate courage. They’d rather sweep it under the carpet. But real governance takes courage."
That’s a courage that has been singularly lacking in the country’s boardrooms, where appeasement is more valued than accountability. If Steinhoff’s implosion triggers a change in that odious boardroom culture, it won’t be a moment too soon.