Bullshit! This is what South African Airways boss Khaya Ngqula told South Africans on national television when confronted about a monthly bonus of close to R70,000 that the airline is paying him to stay in his job.
“Oh, that is not true. Gosh, I’d love to earn R70,000 a month. That’s definitely not true... it’s fantasy and wishful thinking,” he said.
But today Business Times can reveal that the SAA CEO lied about the staggering R68,750 monthly payment he received — in addition to his annual R5.3-million salary — to turn the ailing airline into a profitable parastatal.
Two weeks ago, in an interview on pay channel M-Net’s Carte Blanche programme, Ngqula disputed claims that he earned the bonus and said it was simply untrue. When pressed on the matter, Ngqula lashed out: “Bullshit... it’s rubbish.”
Ngqula is not the only SAA executive to receive fat monthly payments. Top executives and other “key” staff in on the scheme will cost the government an estimated R24-million a year until November 2010, when it expires.
This week Business Times established that the airline’s controversial retention bonus scheme is in full flight — and has already paid out the embattled airline’s managers R9-million since November last year when it was implemented.
Ngqula’s team of 17 executives has already raked in R3.9-million. The high-flying executive team’s monthly bonuses range from R68750 for Ngqula to R16,000 for lower-ranking staff.
On Friday, the airline’s human resources general manager Bhabhalazi Bulunga, who incidentally scores R33,000 a month on top of his R1.6-million annual salary package, told Business Times that a total of 127 managers across the airline were getting extra rewards every month.
He calculated that SAA had already paid out more than R9-million since implementing the scheme.
According to the Department of Public Enterprises, about R24-million a year has been allocated for the “golden handcuffs”.
Economist James Hodge told Carte Blanche that it was unusual for a chief executive to be “tied” to a renumeration bonus and not a performance-related bonus.
No stranger to controversy, Ngqula received an incredible R4.7-million for four months of work at the Industrial Development Corporation, a state-owned finance institution, and then went on to receive R2.3-million for seven months as the chief executive of SAA, according to a report by remuneration experts Mabili.
Last month, the cash-strapped airline approached government, it’s only shareholder, seeking billions to recapitalise its business.
In the past two years government has bailed out SAA to the tune of R2.8-billion. Chief financial officer Kaushik Patel has reportedly said the restructuring and cost-cutting process has changed the business to such an extent that it could deliver a net profit of R123-million.
On Friday, Bulunga said: “As part of the restructuring process, SAA entered into contracts with a group of managers in an effort to retain the necessary skills and experience to ensure the continuation of core functions within the airline.”
Since April last year, 105 managers have left the airline.
“The retention of these skills is vital to ensuring the restructuring is successfully completed,” Bulunga said, adding that bonuses were normal business practice in companies faced with the potential loss of experienced and skilled individuals.
Deloitte’s annual survey of executive rewards in 500 local companies shows that 55% implemented retention strategies to reduce executive turnover as early as 2005.
Trade unions — the SA Transport and Allied Workers Union and the United Association of SA — which represent SAA’s cabin crew and ground staff, described the bonuses as a “sore point” for their members.
SAA has cut about 2000 jobs since launching an ambitious restructuring and cost-cutting programme in June last year in a bid to save the airline R2.7-billion within 18 months.
Other SAA executives that have scored include:
Operations general manager Frederick Smyth, with an annual pay package of R2.1-million, who has pocketed about R275,000 extra in the past 10 months.
Legal counsel Louisa Zondo, with an annual salary of R1.6-million, who pockets an additional R42,487 a month.
Retention bonuses have also gone to: human resources general manager Mbongeni Manqele, who got R26,950; head of department Vera Kriel (R25,355), and company secretary Mantshebo Melk (R16,051).
Calculations show that the 17 executive bonuses cost the cash-strapped airline R4.7-million a year.
By November 2010, the total bill for executive bonuses will have climbed to a staggering R14.3-million.
Responding to questions in parliament about the retention bonuses last month, public enterprises minister Alec Erwin said they would be paid over three years to “identified managers” only.
Responding in a statement to questions from the Democratic Alliance, he said that if a manager resigned from SAA the entire bonus would have to be repaid.
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