Cell C CEO George Mendes spent 20.8 million Rands to purchase company shares in September. These purchases supplement a much larger stake he received for free: 7.65 million shares, valued at approximately 203 million Rands based on the listing price of 26.50 Rands, which were allocated to him by the operator's largest shareholder during the JSE listing last November.
Cell C confirmed this arrangement in response to inquiries from TechCentral. The shares came from The Prepaid Company (TPC), a subsidiary of Blu Label Unlimited Group, which still holds 49.5% of Cell C. Cell C stated that the executives did not finance the acquisition, and neither corporate nor equity financing was involved.
This transfer was part of a 'management structure' totaling 15.3 million shares, representing 4.5% of Cell C, which TPC planned to grant to the operator's executives before the listing. According to Cell C, this occurred on the day of the company's listing on the JSE at the offering price and was separate from the conversion of TPC's debt claims into equity capital.
Cell C's first integrated annual report as a public company details the distribution of these shares. In addition to Mendes' 7.65 million shares, CFO El Cope and Head of Office, Strategy and Business Transformation Specialist Rachel Ayo-Oladedejo, each hold 918,000 shares, valued at approximately 24 million Rands each at the listing price. Cell C reported that these three tranches, totaling 9.49 million shares, are part of the structure, while the remaining approximately 5.8 million shares, worth about 154 million Rands, were given to appointed officials who are not directors.
According to Cell C, these shares cannot be sold until they vest: 60% within an average period of about 3.3 years, and the remainder within approximately 5.3 years. Until then, they are held in a brokerage account on behalf of Cell C Holdings. Moneyweb reported during the listing that the shares would become unrestricted upon the fifth and seventh anniversaries of each executive joining Cell C.
"Own Money"
Mendes' purchases in September—52,187 shares at 23 Rands on September 17 and 740,000 shares at 26.50 Rands on September 21—were made on the open market and had a direct beneficial impact. This increased his stake to approximately 8.44 million shares, with the purchased shares accounting for about 9% of his holding.
The granted shares are added to his compensation. For the year ending May 31, Mendes earned 29.3 million Rands, including a cash bonus of 11.96 million Rands, despite the operator not meeting the profit target that governs his incentive scheme.
Cell C's short-term incentives were tied to 'controlled' EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), excluding Comm Equipment Company, the phone sales business acquired by the company during the year. With a target of 2.25 billion Rands, Cell C achieved 2.11 billion Rands, or 94%, resulting in a company multiplier of 76%. Subsequently, the board's remuneration committee rated both Mendes and Cope as 'exceeding expectations' and applied an individual multiplier of 125%, increasing their bonuses by more than 90% of the target. Cope's bonus amounted to 4.28 million Rands.
When asked what the 125% rating was based on, Cell C stated that the board took into account 'executive leadership in successfully conducting the listing,' repositioning the company for growth, 'achieving profitability for the first time in many years,' retaining key talent, and building a high-performance culture.
This profitability was largely driven by the restructuring itself. When assessing the same year for its own incentive system, the Blu Label remuneration committee excluded 3.02 billion Rands in restructuring, recapitalization, and listing expenses from Cell C's net profit of 4.16 billion Rands, leaving a normalized profit of 1.14 billion Rands. The report shows bonuses at 93% of the target, although their own multipliers yield 95%. Cell C stated that 93% is correct, and the published percentages are rounded, while the calculation uses raw figures.
Mendes' guaranteed pay of 14.8 million Rands increases by 4.5% to 15.4 million Rands for the current year. Non-executive directors expect salary increases of up to 17%, while the board's base fixed rate rises by 11% to 500,000 Rands, compared to a 5–6% increase in employee salaries. Cell C noted that director fees had not risen for over three years, and the proposed increases aligned with market standard analysis.