Absa pays Mminele R30.5m in fraught separation

Absa Group paid former CEO Daniel Mminele a total amount of R30.47 million in what was a fraught separation last year. Mminele left the group “mutually” on April 30, 2021 after agreeing to step down on April 20. He had been in the job for 15 months, of which only just three-and-a-half fell into the most recent financial year. This was revealed in the Absa integrated report for 2021, published on  Wednesday.

The group says “for a speedy resolution and in the best interests of the organisation, the board agreed that Daniel would receive a termination payment that would include good leaver treatment on unvested short-term incentive deferrals and unvested long-term incentives, in respect of which Daniel received cash-equivalent payments. All outstanding awards lapsed on termination.”

Read: Mminele exit: Absa board faces serious questions

More than half of the R30.5 million was in the form of a so-called “ex-gratia” (‘by favour’) payment of R16.5 million following the termination. Absa says the elements of the mutual separation payment were negotiated, and it provides an almost exhausting level of disclosure of these in the report.

It says Mminele received payments for the following:

• “A payment of R5 million in lieu of his 2020 short-term incentive, which had been fully deferred into Absa Group shares based on a RemCo [Remuneration Committee] decision that took PRA guidance on Covid-19 into account;
• A payment of R3.25 million in lieu of his 2021 long-term incentive award. The face value of this award was R15 million; and
• An ex-gratia payment of R16.5 million.”

He also received contractual payments including “R4.5 million in lieu of six months contractual notice, [and] a payment of R750 000 in lieu of accumulated leave”.

It says the “group agreed to contribute to Daniel’s legal costs. An amount of R466 000 was paid directly to him and was subject to taxation and other statutory contributions.”

The bank also adds that “given that the separation terms are in full and final settlement of any claims either party may have against the other, the separation payments are not subject to malus or clawback provisions.”

In 2020, Mminele was paid R13.66 million for the period January 15 to December 31, with the bulk coming from his total fixed remuneration of R8.66 million. He received a further R5 million in deferred share awards. This figure excluded the R15 million face value of his long-term incentive award. The full R5 million amount (deferred shares) was paid out as part of the settlement, along with 22% (R3.25 million) of the long-term award from his first year of service.

Absa announced in April last year that the separation “was a consequence of the non-alignment between the board and Mminele on strategy and culture transformation matters”.

Group finance director Jason Quinn, who took on the interim CEO role from May 1, was paid a total of R26.355 million. This included fixed remuneration of R6 million, no change on the prior year. He received no increase for his cost-to-company in the year, despite the group noting that he had taken on the interim chief executive role. Quinn was awarded a short-term incentive totalling R17 million “recognising” that he did not receive an increase in his salary when assuming the role. The R17 million included a non-deferred cash award of R9 million.

Interim finance director Punki Modise received total remuneration of R13.3 million in the year.

Then-CEO of Retail and Business Banking (RBB) Arrie Rautenbach, who was appointed as group CEO last month, received remuneration totalling R23.2 million last year. Only R7.26 million was the cost-to-company. He also received a R2 million payout reflecting the “encashment of leave as a consequence of changes to [the group’s] leave policy”. Presumably Rautenbach hasn’t taken his full quota of leave over the past few decades. He was awarded an additional R4.5 million in long-term incentives “pursuant” to his appointment as group CEO in March.

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