[dropcapN[/dropcap]et1 UEPS Technologies’ two largest shareholders, the International Finance Corp (IFC) and Allan Gray, have expressed shock at the whopping R265m golden handshake that outgoing CEO Serge Belamant will be paid.

Both shareholders have again raised concerns with Net1’s board on governance issues, including severance pay to executives.

Net1, which has a primary listing on the Nasdaq in New York, revealed in a disclosure to the US Securities and Exchange Commission on Tuesday that Belamant would receive a US$8m (R105m) severance payment.

Last week, Belamant resigned as CEO and took early retirement effective 31 May 2017. Chief financial officer Herman Kotzé will replace him on 1 June.

The retirement of the outspoken Belamant comes in the wake of widespread criticism of Net1’s role in the controversial handling of social grant payments to 10,6m beneficiaries by the South African Social Service Agency (Sassa) via its subsidiary Cash Paymaster Services (CPS).

The severance payment is not the only parting gift to Belamant.

His payout is further enlarged by Net1’s repurchase of his more than a million shares at $10,80 (amassing $10,8m, or R142m), representing a premium of nearly 13% from Tuesday’s $9,41 close of the company’s shares on the Nasdaq.

Net1 will also pay Belamant $50 000 (R657 000) a month for consulting services, which it said will be for two years, to offer technical expertise for the development of the company’s international operations. This equates to $1,2 (R15,7m) over 24 months.

Considering the above-mentioned forms of payments, it means that Belamant would be awarded $20m in total or R265m in rand terms.

Net1 has justified Belamant’s payout by saying it represents his 27 years of service with the company as a founder and CEO.

The repurchase of Belamant’s shares doesn’t represent his entire shareholding of 1,2m shares or 2,1% stake in Net1, according to its latest annual report. Net1 agreed to allow the accelerated vesting of his remaining 200 000 shares.

IFC spokesman Desmond Dodd said the company learnt of the terms of Belamant’s departure from Net1 like other shareholders, through the public disclosure.

“While responsibility for negotiating and approving these terms belongs to Net1’s board of directors, IFC is frustrated with the situation in which the board finds itself. IFC has been deeply concerned with the governance issues at Net1,” he said.

IFC, a member of the World Bank, is Net1’s largest shareholder with a 17% stake.

Andrew Lapping, chief investment officer at Allan Gray, which owns a 15,6% stake in Net1, said he was surprised at how Belamant was able to negotiate “such an extravagant deal” and believes the payout is unjustified.

“For a number of years, we have been concerned about multimillion-rand ex gratia severance payments made to executives and that shareholders are unable to block such payments,” said Lapping.

He said Allan Gray has raised its concern to the King IV team on corporate governance and the JSE to recommend that severance payments to executives should be subjected to a vote by shareholders. “As our proposals have not been implemented and we were not privy to the negotiation with Belamant, we regret the settlement reached.”

For a number of years, we have been concerned about multimillion-rand ex gratia severance payments made to executives

Net1 came under fire after the continuation of its contract to distribute social grants between CPS and Sassa despite it being declared invalid by the constitutional court as the tender process was flawed. The CPS contract expired on 31 March 2017. At the eleventh hour, the court extended it for another year after civil rights organisation The Black Sash asked the court to supervise a new social grant payments contract.

Belamant was recently gagged by Net1’s board for his controversial comments regarding CPS being the only service provider that can manage grant payments. IFC and Allan Gray also called for board changes at the company.