| Thu 18 Oct 2001, 0:00 | | Datatec Limited - Announcement |
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Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/005004/06)
Share code: DTC ISIN code: ZAE000017745
("Datatec")
Announcement
Further to the announcement dated 10th October 2001, and subsequent
discussions with major shareholders, the Board and Remuneration Committee of
Datatec, excluding the affected Directors, advise as follows.
1 Future policy
All future remuneration, bonuses and share incentive schemes for head office
executives will be based solely on the overall performance of the Group, as
reviewed and approved by the Remuneration Committee.
The existing share schemes in subsidiaries have been revised and amendments
have been made to the UUNet SA (Pty) Limited ("UUNet") bonus .
2 The UUNet bonus
The following issues were taken into consideration:
The Board and Remuneration Committee are responsible for evaluating
executives on their performance and on the performance of the company. In
the year to March 2001 Datatec achieved record sales of R20.1 billion, 95%
of which originated outside of Africa, resulting in a record EBITDA of R1.1
billion. Each of the major subsidiaries, with the exception of Logical, had
a record year.
The decision to sell its 76 % interest in UUNet was consistent with
Datatec's stated strategy to dispose of non-core businesses and the need to
strengthen the balance sheet.
The realisation by the Group's executives of a sale price of US$138.5
million for the group's interest in UUNet resulted in a capital gain in
excess of R900 million to Datatec.
The decision of the Board and Remuneration Committee, related to the UUNet
incentive scheme from its conception in May 2000, followed due process and
proper corporate governance procedures. The independent Remuneration
Committee comprises US and SA non-executive Directors who were guided by
local and international executive remuneration practices in the IT sector
prevailing at the time.
The decision to pay incentive bonuses to those executives directly
responsible for the growth and development of UUNet and its subsequent sale
was a proper one, as the implementation of Datatec's subsidiary share
participation scheme had not been implemented in UUNet where WorldCom, Inc.
was a 24% minority shareholder.
When determining the balance of their total remuneration, the Board and
Remuneration Committee took into account the quantum of the bonus paid to
Messrs Montanana and Rindel from the UUNet proceeds.
This approach, and the decision to remunerate Messrs Montanana and Rindel
for their specific role in founding the original operations of UUNet in
1995, facilitating its growth, and structuring, negotiating and closing the
sale transaction, is at odds with the recently expressed desire of certain
shareholders that the remuneration of head office executives be based only
on overall Group performance.
Based on the above the Board and Remuneration Committee have decided as
follows:
The R24 million bonus paid to the 21 executives directly employed by UUNet
(including Mr M Karpul, a Datatec director whose only executive role was as
Chairman of UUNet) will stand.
The aggregate UUNet bonus of R11.8 million paid to Messrs Montanana and
Rindel in March 2001, will be reduced by R4.0 million. In order to
demonstrate their confidence in the Group and an alignment of their
interests with those of all shareholders, JP Montanana has already invested
in 250,000 Datatec shares at an average price of R17. RS Rindel has elected
to invest the remainder, after deduction of tax and contributions to
retirement annuities, in Datatec shares. They have elected not to sell such
shares for a period of three years or until the share price reaches R28 and
holds that level for ten trading days, whichever comes sooner.
3 Share schemes in subsidiaries
The participation of head office executives in subsidiary share schemes as
outlined in the annual report for 2000 has been replaced by Datatec options.
The quantum of the Datatec options issued approximates the value of the
participations at the subsidiary level that have been replaced. These
options will be issued in terms of the existing share option scheme, as
follows:
New options
to be issued
JP Montanana 700,000
RS Rindel 410,000
The process followed by the Board and Remuneration Committee has met with
the approval of all the institutional shareholders with which the issues
were discussed, representing 55% of the shares in issue.
Sandton
18 October 2001
Sponsor
RMB Corporate Finance
