Old Mutual executive pay soars on successful separation

Peter Moyo and a small group of executives responsible for delivering the successful managed separation of financial services group Old Mutual  have been rewarded with a significant financial bonanza.

According to Old Mutual's remuneration report for the year ended December 2018, CEO Moyo’s total compensation increased by 32% to R50.5m. The biggest contributor to the increase was the managed separation incentive plan, for which he was awarded R15.4m. 

Old Mutual undertook a major restructuring during 2018 referred to as the “managed separation”. This resulted in the conglomerate selling down its stake in Nedbank, separately listing its UK Wealth division as Quilter on the London Stock Exchange and relisting its emerging-markets business in Johannesburg under the Old Mutual brand. 

The managed separation incentive plan is paid out in shares and cash — 50% of the value was paid as a cash bonus at the end of 2018, while 50% of the value will be distributed in the form of shares during 2019. It is a once-off bonus and will not be repeated. 

Moyo’s increase was small relative to other executives at the group — six “prescribed officers” and one other executive director. On a comparative and constant-currency basis, remuneration rose 24% to R277m for the group of eight executives. 

More largesse appears to be on the way. Three executives, including Clarence Nethengwe, Karabo Morule and Clement Chinaka, have had their base salaries increased based on the results of a benchmarking exercise. This will result in increases of 11%-17% in their base salaries.

The Old Mutual share price rose 2.7% on Friday to close at R21.87 per share. The share price has fallen more than R7 since listing in June last year. 

Writing in Old Mutual's latest annual report, Moyo said he expects economic conditions to remain tough. 

“The economic outlook has marginally improved relative to the previous year, resulting in some increase in business and consumer confidence. However, investor confidence is still fragile with concerns around government debt levels and policy uncertainty, particularly around the proposed policy on land expropriation without compensation,” Moyo wrote.

But despite the weak growth outlook in SA, coupled with macroeconomic risks and “strong competitive pressures”, the group was confident it would reach its medium-term targets, he said.

Old Mutual completed a managed separation programme in 2018, with the listing of Old Mutual Ltd on five different exchanges in June 2018 and the unbundling of 32% of Nedbank in October.