Retailer Spar, which battled a governance crisis a year ago, paid former CEO Brett Botten a sizeable lump sum payment and a long service award totalling more than R14 million upon his rather sudden retirement in January.
The group announced just 14 days before his departure that Botten, who was only appointed in March 2021, would retire on 31 January.
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Read: Spar Group CEO Brett Botten to exit
Much about Botten’s abrupt ‘retirement’ did not make sense – not least because he was only 57 years old. The group does note in its remuneration policy that the group CEO position has a “notice period of three months”.
However, questions were being asked about his time as MD of the group’s main South Rand distribution centre on the back of a well-publicised report by law firm Harris Nupen Molebatsi into allegations that black owners of stores were being treated unfairly. Botten held this position before taking over as group CEO.
According to BusinessLIVE, the report flagged potentially “fictitious loans”, which had been used to possibly “inflate the profitability” of the distribution unit. In a convoluted series of transactions, the sale of one store in Midrand was concluded twice, first for R1 000 and then for R8 million, ‘coincidentally’ what the store owed its distribution centre.
The group then provided a marketing contribution of R167 000 per month – also ‘coincidentally’ the loan repayment value – from Spar each month. BusinessLIVE reported that a whistleblower alleged that the loan was set up to boost income for the division to ensure district managers were paid bonuses in a specific period.
In December, the retailer confirmed the existence of the report and said it took the allegations “extremely seriously”.
In January, it said its legal team had concurred with its auditors, PwC, that a “reportable irregularity had occurred”. It said its board confirmed that a “written loan agreement was entered into between a willing lender and borrower through a commercial bank at normal interest rates with fixed terms of repayment.
However, the board concluded that the loan did not seem to have served any real commercial or economic purpose and should not have taken place”.
In its investigation, it identified two other similar transactions. Together, the three loans totalled R11 million, suggesting that the Midrand store loan was the bulk of these. It maintained that the “loans were isolated and occurred five years ago”.
Big payday
The group’s integrated report for 2023 shows that Botten was paid a “lump sum payment” of R12.721 million upon his retirement. It provides no further details of the reasons for this payment. He also received a “long service award” estimated to be in the region of R1.5 million. This is buried in the “Allowance and other benefits” category in the breakdown of his remuneration for the year.
A footnote reveals that “other benefits include medical aid contributions and a long service award”. Botten received benefits of around R900 000 in the prior year, but he only worked for four months of the 2023 financial year. This means the bulk of the R1.8 million payment was his long service award.
In total, Botten got paid R25 million for those four months’ work.
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This is more than two-and-a-half times his total remuneration for 2022 of R9.8 million. A significant chunk of the R25 million was the R7.4 million in “share option gains”.
CFO Mark Godfrey was paid a total of R9.3 million in the year, a decrease from the R11 million he got in 2022. The reason for this was the fact that the gains on his share options were only R1.1 million versus R3.4 million in the prior year.
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In contrast to the scant detail on Botten’s remuneration, the remuneration committee devotes over 300 words to the pay structure for chair Mike Bosman, who took on the interim role of executive chair following Botten’s rushed exit.
It says the committee “determined that, to further safeguard his independence, the package should only consist of fixed remuneration with no exposure to variable pay. The committee sought to ensure that the interim package was fair and reasonable, and reflective of the magnitude of the responsibility that the Executive Chair role required to deliver stability to the Group during this critical transition period while actively driving a recruitment process to fill SPAR’s Group CEO vacancy.
“The committee is satisfied that it was able to achieve pay fairness relative to responsibility for this interim Executive Chairman period. Furthermore, the committee is satisfied that Mike Bosman successfully executed on his interim Executive Chairman mandate through his effective contribution in providing stability to the Group while simultaneously executing on the strategic recruitment drive that resulted in the appointment of a Group CEO as well as a Group COO.”
Read: Spar appoints Angelo Swartz as new CEO
Bosman was paid a total of R14.9 million for his role as executive chair and a further R221 000 for the months during which he was non-executive chair. It has proposed a 5% increase for the fees to be paid to the board’s chair in 2024 to take the rate to R2.9 million.
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