The R20.8-million Cell C CEO Jorge Mendes spent on the company’s shares in September sits on top of a far larger holding he did not pay for: 7.65 million shares, worth about R203-million at the R26.50 listing price, allocated to him by the operator’s largest shareholder when it listed on the JSE last November.
Cell C confirmed the arrangement in response to questions from TechCentral. The shares came from The Prepaid Company (TPC), the Blu Label Unlimited Group subsidiary that still owns 49.5% of Cell C. “The executives did not fund the acquisition, and no company or shareholder loan was involved,” Cell C said.
The transfer was part of a 15.3 million-share “management structure”, equal to 4.5% of Cell C, that TPC said before the listing it would hand to the operator’s executives. It took effect on the day Cell C listed on the JSE, at the listing price, and was separate from the conversion of TPC’s debt claims into equity, Cell C said.
Cell C’s first integrated annual report as a listed company shows how the shares were split. Besides Mendes’s 7.65 million, chief financial officer El Kope and chief of staff, strategy and business transformation Rachael Ayo-Oladejo hold 918 000 each, worth about R24-million apiece at the listing price. Cell C said those three holdings, 9.49 million shares in total, form part of the structure, and that the remaining 5.8 million or so, worth about R154-million, went to prescribed officers who are not directors.
The shares cannot be sold until they vest: 60% over an average of about 3.3 years and the rest over about 5.3 years, according to Cell C. Until then, they are held in a broking account in Cell C Holdings’ name. Moneyweb reported at the time of the listing that the shares would become unrestricted on the fifth and seventh anniversaries of each executive joining Cell C.
‘Own money’
Mendes’s September purchases, 52 187 shares at R23 on 17 September and 740 000 at R26.50 on 21 September, were on-market and direct beneficial. They lift his holding to about 8.44 million shares, so the shares he bought make up about 9% of his stake.
The transferred shares come on top of his pay. Mendes earned R29.3-million in the year to 31 May, including a cash bonus of R11.96-million, even though the operator missed the profit target that governs its incentive scheme.
Cell C’s short-term incentive was tied to “controllable” Ebitda (earnings before interest, tax, depreciation and amortisation), which excludes Comm Equipment Company, the handset business it acquired during the year. Against a target of R2.25-billion, Cell C delivered R2.11-billion, or 94%, producing a company multiplier of 76%. The board’s remuneration committee then rated both Mendes and Kope as having “exceeded expectations” and applied an individual factor of 125%, lifting their bonuses to more than 90% of target. Kope’s bonus was R4.28-million.
Asked what the 125% rating was based on, Cell C said the board considered the executives’ “leadership in delivering the successful listing”, repositioning the company for growth, “achieving profitability for the first time in many years”, retaining key talent and building a high-performance culture.
That profit owed much to the restructuring itself. Assessing the same year for its own incentive scheme, Blu Label’s remuneration committee stripped R3.02-billion of restructuring, recapitalisation and listing items out of Cell C’s R4.16-billion net profit, leaving normalised profit of R1.14-billion.
The report puts the bonuses at 93% of target, although its own multipliers work out to 95%. Cell C said 93% is correct and that the published percentages are rounded, while the calculation uses unrounded values.
Mendes’s guaranteed pay of R14.8-million rises 4.5% to R15.4-million for the current year. Non-executive directors are in line for fee increases of as much as 17%, with the basic board retainer rising 11% to R500 000, against staff increases of 5-6%. Cell C said directors’ fees had not risen in more than three years and that the proposed increases followed a market benchmarking exercise. – © 2026 NewsCentral Media
