THE BOTTOM LINE
Tongaat Hulett: Sweet for some, very bitter for others
CEO walks away with R12.8-million while pension fund members are left in the lurch
The board members of Tongaat Hulett may have to contend with more than frustrated shareholders at their annual general meeting next week. The latest issue of Noseweek contains a timely reminder of the company’s long, drawn-out battle with its pensioners – some of whom might be tempted to make the trip to the KwaZulu-Natal coast to attend the meeting.
At the end of May the Supreme Court of Appeal upheld an earlier ruling by the Durban High Court that Tongaat had legally taken R363.2-million from the Tongaat-Hulett Defined Benefit Pension Fund when it was wound up in 2012 and its 2,500 members transferred to an Old Mutual benefit fund.Not only did they lose the case, the pensioners were ordered to pay Tongaat’s legal costs. It must be a bitter disappointment to the pensioners who alleged their fund had been looted over a five-year period. Making things even worse is that the Old Mutual fund has provided disappointing returns for them.
The grim reality is that Tongaat is far from being the first company to use pension fund “surpluses” to boost its balance sheet. And, as the SCA ruled, it is entirely legal. That doesn’t make it easier for the pensioners to accept.
In Tongaat’s case the hefty payouts awarded to Peter Staude, who was appointed CEO all the way back in 2001, must make it all a little more difficult to swallow. Staude, who has overseen a steep collapse in the Tongaat share price, was paid a R6.6-million bonus in financial 2018, lifting his remuneration package to R12.8-million for the year. Calls for him to step down are a little too late as he is due to retire next year. And unlike his former colleagues he won’t have to worry about surviving on a meagre pension.