Spare a thought for Telkom CEO Sizwe Nxasana. He has just had his salary package cut by 37%, from R11,14-million to R6,9-million.
Telkom has cut executive salaries and bonuses in the past two years from R59-million to R33-million. The Telkom board, no doubt, has taken note of the new mood sweeping the country as workers look not so much at CPIX (consumer inflation minus mortgages) when tabling their wage demands, but the high-flying, stratospheric salary packages of corporate executives.
Nxasana still earns 100 times that of the lowest-paid Telkom employee, but you can’t help wondering what he thinks when he considers his nearest rival on the JSE Securities Exchange, MTN CEO Phuthuma Nhleko.
Nhleko’s total earnings last year topped R23-million, more than three times that of Nxasana.
The difference starts right at the basic salary level, Nxasana gets R2,13-million, Nhleko R4,3-million. Nhleko did better in the bonus stakes too. He was paid a R9,2-million bonus, Nxasana’s was just R3,6-million. Nhleko got a further R8,9-million this year through the controversial activity, which he has reportedly been told to stop, of trading his share options.
MTN says that at no point was Nhleko barred from derivative trading. “On March 25 2004, Nhleko traded in derivatives in his own right, carrying such risks associated with such trades in his personal capacity. [JSE] Sens announcements to this effect were posted on March 25 and September 9 2004,” says an MTN spokesperson.
“In the Sens announcement of September 9 2004, shareholders were advised that all the call options had been exercised and that prior written approval for this transaction had been obtained from the JSE.
“The MTN Share Option Trust was not party to the trade. Nhleko’s trade in derivatives is distinct from his share options, which he can only exercise in accordance with the rules of the Trust.”
Nhleko’s share options, the spokesperson says, were worth R69-million at the end of March 2005.
Back at Telkom, Nxasana does have some share options, about 17 000 worth just more than R2-million.
Nhleko, though, has another set of options in an entity called Newshelf 664, a management-led empowerment consortium, which is buying 18,6% of MTN from previous owner, Transnet.
Newshelf 664 is MTN’s largest shareholder and Nhleko has the largest stake in Newshelf 664, making him MTN’s largest shareholder. He has just under 8% of Newshelf shares, which were purchased at R13,90 from Transnet, and is financed by private banks and the Public Investment Commissioners.
The total value of the deal was R4,3-billion, one of the country’s largest empowerment transactions, when it was announced in late 2002.
The value of these shares, after financing costs and share of profits by some of the financing parties, is not disclosed, but one report values Nhleko’s Newshelf shares at R118,5-million.
Nxasana, by contrast, is not an empowerment investor in Telkom. The lead role here has fallen to former communications director general Andile Ngcaba, who scooped about 1,15% of Telkom, a deal value of about R700-million.
The allocation of these shares to Ngcaba has led to great opprobrium in that it was delays caused by Ngcaba, while director general, that frustrated attempts at setting up a serious competitor to Telkom, with disastrous costs to the whole economy.
Nhleko’s interests do not stop at MTN. While other empowerment beneficiaries, notably Cyril Rama-phosa, Tokyo Sexwale, Patrice Motsepe and Saki Macozoma have featured in the empowerment headlines, Nhleko has been relatively low-profile. But he has corralled an impressive range of empowerment assets.
He is a lead investor, with SAA chief executive Khaya Ngqula, in Worldwide African Investments, which has a portfolio of investments worth R3,5-billion. Worldwide is an unlisted entity which discloses few details about itself.
Nhleko, a founding shareholder in Worldwide, is now a shareholder with Ngqula in Khatuma Investments which, with Standard Bank owning 26%, has 31% of the issued shares of Worldwide.
Ngqula is estimated to be worth R100-million. It is a reasonable bet that Nhleko has a similar worth tied up in Worldwide.
MTN replied to e-mailed questions, sent to Nhleko on his holdings in Worldwide, by saying “questions relating to Nhleko’s private business remain in his private domain and MTN is unable to comment”.
Nxasana is now the out-going chief executive at Telkom. Is he leaving so he can chase the real moolah?