Top executives at JSE-listed IT services group EOH Holdings, including CEO Stephen van Coller, will have their salaries cut by 25%, while those earning more than R250 000/year will see their pay reduced by 20%.
The group has implemented the drastic measures to deal with the financial impact of the Covid-19 pandemic and the associated lockdown in South Africa to ensure it can keep serving its clients.
The CEO and executive committee will see a salary reduction of 25%, while the group has proposed a 20% reduction “across the board” in cash salaries. Those earnings below R250 000 are likely to be spared the cuts.
Alongside its interim results for the six months to end-January 2020, EOH said it is taking a number of other steps to reduce the impact of Covid-19 on its business, including negotiating rent holidays; reviewing all fixed-term and consultant contracts; reassessing the retirement policy for those over 65; a review of variable pay elements including travel and overtime; and a review of discretionary spend on travel, entertainment and events.
EOH said its core ICT business has been classified as an essential service and will continue operating during the lockdown period.
“The group has a Covid-19 management team in place consisting of all the representatives from the executive committee as well as key operational and support functions,” it said. “The team monitors the situation on a daily basis and ensures that adequate risk management and mitigation actions are taken, as well as appropriate communication and engagement with clients, staff and other stakeholders.”
‘Systemic’
“Being systemic to South Africa’s IT backbone creates significant responsibility for the group during Covid-19 to ensure it remains robust in order to continue providing key services to its 5 000 long-term clients. These include many banks in South Africa and the rest of Africa, telecommunication companies, Eskom, municipalities and government agencies. For this reason, the board and management of EOH felt it necessary to take proactive steps to ensure EOH is prudent in these times of uncertainty.”
In an interview with TechCentral at the weekend, before the pay-cut plan was finalised, Van Coller said the intention was to try to save jobs, to prepare the group for what could be a severe shock to the economy and to ensure EOH could continue delivering IT services to corporate South Africa.
He said there was little consensus about the size of the economic recession that was coming but predicted GDP growth could crash by between 5% and 10% in the coming months and severe economic pain could last for between six and nine months.
Using a war analogy, Van Coller said there was an “enemy” coming, but it was not clear yet what the scale of the attack would be. “I’d be remiss if I didn’t prepare for the attack,” he said. – © 2020 NewsCentral Media