The former CEO of cement producer PPC, Roland van Wijnen, whose contract ended on 31 December, received a ‘pay out’ of R23.5 million just four days before departing the group.
The amount was unrelated to his normal salary, but in the form of shares under the group’s incentive plan that would’ve only vested from the middle of next year onwards. However, because his contract was up, the group decided to ‘ignore’ this requirement and instead “accelerate” the vesting of the shares.
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This is rather unusual as departing executives tend to forfeit any unvested shares received under remuneration incentive plans.
Van Wijnen was granted a total of 6.2 million shares under PPC’s long-term incentive plan (LTIP) in its 2022 and 2023 financial years. The group’s remuneration policy explains that shares awarded under the LTIP are “subject to a three-year holding and vesting period” and that the so-called ‘payment year’ follows in year five.
In terms of this policy, only year one of the three-year vesting period had been met for the 2.9 million shares awarded in July 2021. For the 3.3 million awarded in July 2022, the threshold of the first year of vesting had not even been reached upon Van Wijnen’s departure.
‘Performance criteria met’
It said the board’s ‘Reward and Talent Committee’ (basically the remuneration committee) “resolved to accelerate the vesting date of these PPC Shares in terms of the rules of the LTIP” as the performance criteria had “been met” by Van Wijnen during his tenure.
Van Wijnen’s main accomplishment as CEO (he joined the group in September 2019) was to restructure the group’s large debt pile.
He also had to fix some glaring governance and financial reporting issues. There were major delays to its financial reporting in 2020 as it worked to fix some large accounting errors in prior year results and restate these numbers.
Read:
PPC to tackle $150m DRC debt, embark on planned rights issue [Oct 2020]
PPC in R380m empowerment deal [Aug 2023]
PPC Highveld blending plant to ramp up outputs [Oct 2023]
PPC restructures senior management following sale of Rwanda business for R804m [Nov 2023]
The acceleration of the vesting of these shares to 27 December effectively means that the requirement for holding the shares was removed. Ordinarily, these two awards would’ve only completely vested in mid-2024 and mid-2025.
PPC’s share price over the past five years
The 6.2 million shares in the group, valued at R23.5 million (at a share price of R3.79 as at that date), were distributed to Van Wijnen at the tail end of 2022.
At the current market price (closer to R4), the shares are worth over R24 million. This is close to double Van Wijnen’s annual salary, excluding any incentives.
In 2023, his ‘total cost to company’ was nearly R11 million, comprising a salary, car allowance, accommodation expenses and cellphone allowances. He also received cash incentives of R2.7 million.
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Van Wijnen, a Dutch national, joined PPC as CEO following a nearly year-long search to replace Johan Claasen who took early retirement.
On joining the group, he also received a sign-on award of 1.3 million forfeitable shares without performance conditions. These vested on 1 October 2022. Until his departure, Van Wijnen had not disposed of any of these. At current prices, these are worth around R5.1 million.
Van Wijnen has no doubt returned to Europe. The value of his LTIP and sign-on shares together? Not even €1.5 million.
His contract ended on 31 August and this was extended to 31 December to “facilitate an appropriate handover and transition” to replacement, Matias Cardarelli, who officially started as CEO on 1 December (following the now-typical delays in obtaining his work permit).
It is unclear why the group’s remuneration committee decided to first award Van Wijnen with shares under its LTIP just under halfway into what was clearly only ever going to be a four-year contract. There was simply no possible way these could vest under the plan’s rules.
Its remco has clearly learnt from this mess. Cardarelli has received a sign-on award of 7.5 million shares under the group’s LTIP, valued at R28 million as at end November. Importantly, even though these shares will still vest over three years, there are no performance conditions attached.
Prior to joining PPC, Cardarelli was CEO of Natal Portland Cement (NPC), owned by Brazil’s Intercement. The Brazilian group sold NPC to China’s Huaxin last year.
Listen to this April 2021 MoneywebNOW podcast with Simon Brown in which Van Wijnen discusses PPC’s successful restructuring in the DRC:
You can also listen to this podcast on iono.fm here.
