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Sasol Headquarters in Johannesburg
- Before the shareholders’ vote, Sasol cut president and director fees.
- His fees, which have been based in dollars since 2018, despite the fact that most of the directors are in South Africa, have seen large increases in recent years, according to an activist group of shareholders.
- This at a time when the company made some disastrous decisions and left it with a heavy load of debt.
- For more articles, go to www.businessinsider.co.za.
In a precautionary measure, Sasol announced Wednesday that its chairman and twelve non-executive directors will get 20% less this year than it previously proposed, given the “significant challenges Sasol still faces and in recognition of the erosion of shareholder value. in the last two years. “
Shareholders are supposed to vote on directors’ pay on Friday, and since their investment in Sasol has lost 60% of its value so far this year, they may not be in a good mood. Additionally, according to some critics, these directors have been earning excessive fees.
“We note that this cut does not apply to committee fees or outrageous travel fees of up to R260,400 per board meeting,” says Mike Martin, chief analyst for Active Shareholders. “We would have been much happier if Sasol had made the decision to cut fees because it was the right thing to do, and not because it was imposed on them realizing that shareholders might not pass the resolution.
In a recent report, Active Shareholders, a non-profit company that advises shareholders, described their objections to Sasol’s directors’ fees:
Large salary increases: Over the past decade, the president’s fees increased by 106%, far exceeding South Africa’s inflation rate of 67% during the same time. Directors based in South Africa saw a 680% increase in this time.
Dollar-based fees: In 2018, Sasol relocated all of its directors at dollar-based rates despite the fact that most directors are based in South Africa, Martin says. This has been in addition to great rates.
In the previous year, the chairman of Sasol earned $ 445,000 (R6.9 million, at the current exchange rate), while the non-executive directors received $ 150,000 (R2.3 million). They would also receive between $ 11,000 and $ 20,000 for serving on different committees.
Travel diets: In addition to fees, non-executive directors receive a bonus based on the travel time to their destination, according to Active Shareholders. At the exchange rate at the end of the financial year, the fees vary between R86,800 ($ 5,000) and R260,400 ($ 15,000), if the director traveled for more than 15 hours.
“We are told that this fee is a travel fee that is to compensate for inconvenience as well as all costs associated with traveling to South Africa excluding flight and accommodation costs that are covered by Sasol.”
Martin notes that this travel allowance exceeds the company’s annual minimum wage of R221,146.
“The proposed out-of-town allowance to be paid to non-executive directors is a significant increase in their fees and the allowance for a trip will exceed a worker’s annual salary.”
Active Shareholders criticize Sasol for being part of Business Leadership South Africa’s campaign to stop government wage and salary increases, while its non-executive directors have been receiving “excessive” rate increases for the past decade.
Sasol’s staff will not see pay increases this year as the company grapples with a huge debt burden caused by its disastrous Lake Charles Chemicals Project in the US.
This week, Sasol announced that the last of its seven units finally went online, years later than planned. The LCCP cost $ 12.8 billion, nearly $ 4 billion more than the original budget of $ 9 billion.
An independent investigation into the LCCP found inappropriate behavior and incompetence in its project management team. It also found “an inappropriate tone at the top of the LCCP” and that managers did not provide accurate estimates of costs and schedules to executives. Sasol’s joint CEOs Bongani Nqwababa and Stephen Cornell agreed to resign, but still received final packages of R27 million and R69 million, respectively.
“Given the poor performance of the company, many shareholders will be forgiven for finding these packages quite generous,” says Active Shareholders.
Last month, Sasol announced that it would sell 50% of the key Lake Charles assets to LyondellBasell Industries.
Compiled by Helena Wasserman
READ | A billion here and a billion there: how Sasol came to sell 50% of his Lake Charles megaproject
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