Anton Botha, Patrice Motsepe, Karabo Nondumo, Sipho Nkosi and Shirley Zinn: these are the members of the Sanlam remuneration committee that decided to award recently appointed chief executive Paul Hanratty R161 million worth of Sanlam shares.
In a Sens statement, the insurance group said the three million shares will vest in five years, assuming certain unspecified performance targets are met.
At that stage the shares will likely be worth considerably more than R161 million, which is based on the R56 at which they traded last week.
Given the share price is currently at a several-year low, it is almost inevitable that Hanratty’s haul will be worth significantly more by the time he takes ownership of them.
Some estimate over R100. If so, it would mean Hanratty is in line for a R300 million award.
Bishop Jo Seoka, chair of nongovernmental organisation Active Shareholder, which advises trade unions and civil society organisations on voting at corporate annual general meetings, told Moneyweb that pay practices across the corporate sector have become absurd.
“They are irresponsible and immoral.” But there is more for Hanratty.
Although he has to attain certain performance targets, he will receive all the dividends paid on the shares.
Assuming last year’s dividend of 334c a share is maintained, he will receive R10 million in dividend income each year. This will be in addition to his approximate R10 million annual guaranteed pay.
Sanlam told Moneyweb the three million share awards are the first part of a planned five million award and are part of a five-year employment arrangement.
So it could be that Hanratty, who has spent most of his working life getting considerably less well paid at Old Mutual, is in line for a sparkling R500 million-plus share package from Sanlam.
This article first appeared on Moneyweb and was republished with permission.
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