All Aboard!

Tito Mboweni must be licking his lips at the prospect of joining Nampak, which is under fire from shareholders for a "bewildering" gravy train for directors despite the once-powerful packaging company's dismal performance.

At Nampak's AGM this week, when the former Reserve Bank governor's appointment as new chairman was announced, shareholders fumed that Nampak hiked the amount paid to directors by 46% last year, to R30.7-million, despite a 61% plunge in profit.

The R27.6-million paid to Nampak's five executive directors amounted to nearly 14% of Nampak's R202-million after-tax profit.

"A spade needs to be called a spade. I find it bewildering that in a year when the profit before tax goes down by 61%, that these kind of increases can go through," said Ruby Rosenberg, who manages investments for his clients.

What was particularly galling is that, in the annual report, new CEO Andrew Marshall described last year as "disappointing" and admitted that "over the past 10 years Nampak has underperformed". Yet bonuses of R4.9-million were paid to five directors last year.

Nampak's remuneration report makes grim reading for investors, considering that the share price has slid by 30% in the last three years.

For example, Marshall's predecessor, John Bortolan, quit as CEO last March after failing to turn Nampak around, but was paid R14.3-million last year. This included R8.8-million "notice pay", a R513334 "retirement gift" and a R2.1-million bonus.

To entice Marshall to replace him, Nampak had to fork out a R1.5-million "sign-on bonus". Then, after six months in office as CEO, Marshall got a R1.4-million bonus.

Fezekile Tshiqi, Nampak's human resources director, got a R1.67-million "retention payment".

Asked to explain this at the AGM, outgoing chairman Trevor Evans said "certain executives are very mobile" and Marshall recommended the retention payment "to settle the team".

Shareholder activist Theo Botha questioned why Marshall was paid a R1.4-million bonus after only six months in the job. "Only time will tell whether his strategy is working, so these bonuses should be held back ... (Nampak) should review the process of making up-front bonus payments in advance of achievements," he said.

Rosenberg was particularly incensed that Nampak asked shareholders at the AGM to vote to hike the pay of non-executive directors (who got R3.1-million in 2009).

"Surely it's enough," he said. Rosenberg said that while he was "in favour of voting to give them more if the company does well ... the non-executives who direct strategy do not deserve an increase".

Evans rejected claims that Nampak operates a gravy train for directors in an interview with Business Times after the meeting.

"That's not true. Where (the critics) get things wrong is that it gets distorted because you're counting too many directors (because of) the comings and goings," he said.

Evans is correct in that five directors resigned during the year, and another six were appointed - and they all had to be paid. But this does not explain the bonuses, "sign-on bonuses" and other payments.

With such generous remuneration on offer, Mboweni must have needed little convincing to join the firm. He was first approached by Nampak in November, but asked to "think it over" during Christmas, before sealing the deal with a handshake this month.

While Mboweni's future was uncertain before last week - speculation was that he might take an ambassadorship or other government post - his appointment at Nampak suggests his future lies firmly in the corporate sphere.

The move highlights the porous border between government and the corporate sector, after Gill Marcus was plucked from the Absa chair to take up Mboweni's seat as Reserve Bank governor.

Significantly, Evans refused to say whether Mboweni would also get a "sign-on bonus", saying it was a "personal" matter.

Evans was paid R1.1-million last year. Asked if Mboweni's package would be similar, Evans said, "I would rather not comment."

At the Reserve Bank, Mboweni was paid R4.3-million in his last year.

As the Nampak chair is a part-time job, he will be allowed to take up other director positions. But he will have a demanding task providing strategic guidance to a company that has lurched from crisis to disappointment for 10 years.

As Marshall admitted in the annual report, a fifth of Nampak's business was either "loss-making" or performing below par. Marshall's goal - of lifting return-on-equity to 21% from its meagre 4% - looks a long way off.