MTN ex-CEO paid US$1,6 million to leave after Nigeria penalty

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MTN Group Ltd. awarded former Chief Executive Officer Sifiso Dabengwa a 23,7 million rand (US$1,6 million) payout for resigning from Africa’s biggest wireless operator after the company was fined a record US$5,2 billion by Nigerian regulators.

The payout equates to almost three years basic salary and took Dabengwa’s total 2015 remuneration to 40,6 million rand, Johannesburg-based MTN said in the company’s annual report published on Monday. Michael Ikpoki, the former head of the operator’s Nigeria unit, who also left in the wake of the penalty, was awarded 17,3 million rand in compensation.

MTN shares fell 1,7% to 144,86 rand as of 3:08 p.m. in Johannesburg, valuing the company at 267 billion rand. The stock has declined 24% since the fine, later reduced to US$3,9 billion, was made public in October.

The two executives were rewarded even after they resigned to take responsibility for the Nigeria penalty, which equates to about three years of MTN’s earnings before interest, taxes, depreciation and amortization in the country.

The penalty was imposed on the company for missing a deadline to disconnect 5,1 million subscribers that the government had deemed to be unregistered in Nigeria, which is tightening security as it battles an Islamist insurgency.

Phuthuma Nhleko, the former CEO who returned as executive chairman to resolve the Nigeria crisis after Dabengwa resigned, was paid 5 million rand for work from Nov. 9 until the end of the year. His contract runs until May 9, indicating a total payout of 17.5 million rand for six month’s work.

He may also be due a bonus when his contract expires, according to the annual report. The company expects to name a new CEO by end June.

MTN and Nhleko have yet to settle the fine, despite hiring former U.S. Attorney General Eric Holder to represent the company and making a 50 billion naira (US$251 million) down payment. In March, the wireless operator proposed a US$1,5 billion package that included cash, government access to its wireless network and an offer to buy Nigerian sovereign debt.

While the offer hasn’t been formally rejected, negotiations are not currently underway, Nigeria Minister of Communications Adebayo Shittu said April 20.

“I am sure shareholders are not happy to pay out exorbitant golden parachutes to management that were asked to leave because they were incompetent,” Michael Treherne, a money-manager at Vestact Ltd., which holds MTN stock, said by phone. However, the payout to Dabengwa may be the cheapest option if Nhleko can resolve the fine in MTN’s favor, he said.

Nigeria is the biggest of MTN’s 22 markets across Africa and the Middle East, with about 61 million subscribers.-Bloomberg

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