Eight MTN Group executives netted over 1.3 million shares in the telecommunications giant, valued at R116.9-million at the market price (R87.79) when they were issued at the end of December. The shares, issued under the group’s 2015 performance share plan (PSP), vest in December 2021.

Group president and CEO Rob Shuter received over 400 000 shares, valued at R38.3-million at the market price on 28 December. Group chief operating officer and group chief financial officer Jens Schulte-Bockum and Ralph Mupita received around 200 000 shares, valued at R18-million and R17-million respectively.

The group also detailed awards to five other executives who are named prescribed officers (as a guide, an award of 100 000 shares is worth approximately R10-million) — see article.

It must be noted that these are only shares awarded to the three executive directors and named prescribed officers. Employees at all managerial levels (junior through to senior/executive) are eligible to be awarded shares. As at end-December 2017, there were in excess of 16 million shares issued under this plan still outstanding.

From the allocations made in 2017, the following four metrics are used to assess performance under the PSP (each weighted 25%):

Total shareholder return, measured against the MSCI Emerging Markets Telecoms Index;
Cumulative operating free cash flow;
Return on average capital employed; and
Service/retention elements (the group noted that this measure will be reviewed annually).

Given the performance in recent years, the group notes in its 2017 integrated report that zero conditions had been achieved for the awards made in 2015 (deferred to June 2016 and 2017). At the end of 2017, the executives and prescribed officers were awarded nearly 750 000 shares under the plan, significantly fewer than in December 2018.

Executives and management stand to make a lot of money from this plan. All that is required, however, is for the group to perform.

Special incentives

Aside from shares awarded under the PSP, the group granted special cash-settled share-based payment incentive awards to Shuter, Mupita and Schulte-Bockum in “lieu of unvested stocks or equity relinquished upon resignation from previous employment”. Shuter and Schulte-Bockum both joined from Vodafone operations in Europe, while Mupita moved from Old Mutual.

All three started at the group in 2017. Shuter was granted an incentive based on the market value of 327 214 ordinary shares in MTN in March 2020. At a share price of R100, this would be worth nearly R33-million. Mupita received an incentive based on the market value of 446 027 shares (to be paid in October 2019), while Schulte-Bockum received an incentive based on the market value of 64 423 shares to be paid in January 2020.

Shuter’s appointment is currently for a four-year fixed duration to 12 March 2021, while Schulte-Bockum is employed for a “limited duration period” terminating on 15 January 2021. Both of these dates are earlier than the vesting date of the shares awarded in December. Mupita’s appointment has no fixed duration.