Struggling MTN paid bonuses to fired executives, and a major shareholder is livid

MTN has not heard the last of its sim card registration issues in Nigeria.
MTN has not heard the last of its sim card registration issues in Nigeria.
Image: Reuters/Siphiwe Sibeko
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One of MTN’s largest shareholders is irked by bonuses the company paid to fired executives.

The telecommunications giant’s annual report revealed that the company paid former CEO Sifiso Dabengwa 23.7 million rand ($1.6 million), bringing the amount he received last year to a total of $2.8 million. Axed MTN Nigeria CEO Mike Ikpoki was paid a total of $1.8 million.

Both Dabengwa and Ikpoki were forced to step down after Nigerian regulators fined MTN $5.2 billion. The fine was later reduced to $3.9 billion.

Bloomberg reports that the Public Investment Corporation (PIC) is displeased with the bonuses. PIC is one of Africa’s largest money managers, which is wholly owned by the South African government.

“PIC has communicated to MTN management its strong opposition to what we see as gross misuse of shareholder funds,” the fund manager told Bloomberg. “Management and the board of MTN should be held accountable for actions taken under their watch.”

Other investors took the disclosure in stride.

“Whilst I understand it’s an irritation, that’s what happens,” said Sasha Naryshkine, a portfolio manager at Vestact, which also invests in MTN. The wireless operator is Africa’s largest, headquartered in South Africa, with a presence in much of sub-Saharan Africa and parts of the Middle East and Asia.

The shareholder outcry is a global trend toward increased accountability, which has seen investors become more vocal about executive bonuses relative to their dividends, Naryshkine said. But, the bonuses African executives receive are “laughable” compared to their American and European counterparts, he adds.

MTN, meanwhile, has bigger problems. Earnings are plummeting, and the fine and continued wrangling with Nigerian authorities—despite the legal expertise contributed by former US attorney general Eric Holder—has contributed to a share price decline of nearly 25% since the penalty was announced last October.