Hearing on LLR’s P30m Dispute to Begin

  • Suspended CEO is insisting on vast payout
  • LLR board says it was manipulated


Led by Chairperson Boitumelo Mogopa, the board of directors at property firm, Letlole La Rona (LLR), has recommenced disciplinary hearings against its suspended CEO, Chikuni Shenjere-Mutiswa, over a P30 million payout dispute.

However, the LLR board announced this week on the Botswana Stock Exchange (BSE) X-News that the disciplinary process of the suspended CEO was postponed due to the lockdown on the Gaborone and Greater Gaborone COVID-19 zone.

“The hearing will now recommence following the lifting of the lockdown as announced on 13 August 2020 and is expected to conclude (soon),” the board said. “Stakeholders will be updated accordingly before the end of September 2020. The criminal investigation into the matter continues.”

Shenjere-Mutiswa has been on suspension since May this year pending an investigation into allegations by the board that he manipulated the company’s Long-Term Incentive Plan (LTIP).

The dispute began after Shenjere-Mutiswa wrote to the Board Chairperson to claim about P15 million, which is 50 percent of the amount of money apparently due to him and two other executives, the Chief Finance Officer (CFO) and the Property Manager, as part of the LTIP.

The core of the matter is that the CEO, the CFO and the Property Manager are said to be entitled to a reward of P30 million. Insiders say this was in line with the LTIP passed by the company in December 2019. Board chair Mogopa approved all the structures of the plan.

In December 2019, led by Mogopa, the board signed off the group’s LTIP, which had various vesting triggers. Sources say it emerged later that having this plan in place has a significant financial liability on the company for the benefit of three Letlole executives, namely the CEO, the CFO and the Property Manager.

One of the conditions that triggers a payout is the “removal, resignation or departure in whatever manner and for whatever reason, within 12 months, of three or more existing members of the board, in office as at the approval date of this plan or an increase of three or more in the number of directors from the number of appointed directors as at the date of approval of this plan”.

According to the LTIP, changes made to the board would result in a payout to these executives.

So far this year, the board has undergone about four changes that insiders argue mean the executives are entitled to a payout. The most important change was the installment of a Grit representative. First it was Oteng Keabetswe who was appointed early this year.

Further, Curtis Matobolo, a director of the company, tendered his resignation effective 4 May 2020. In April, Bronwyn Corbett was appointed as a non-executive director of the company. Corbett is the CEO of Grit Real Estate Income Group, a London, JSE and SEM-listed Africa-focused real estate company. Grit’s stake in Letlole recently increased from 6.25 percent to 30.0 percent.

Frederick Selolwane was appointed as a non-executive director of the company. Selolwane is the Managing Director of Rider Levett Bucknall (Botswana). These changes prompted executives to launch a claim for payout.

According to the inventive plan, the carry pool (payout) is about 20 percent of the value created since the inception of the incentive plan. It emerges that Letlole had one of the bullish stock prices on the BSE in the past year, carrying its run into 2020. From the time of enacting of the group’s incentive plan, Letlole’s created value was around P200 million.

The incentive plan also takes into consideration the value created by executives since their appointments. Since the appointment of the CEO, the value created sums up to about P250 million. Consequently, the figure that the executives are entitled to rounds up to P30 million. The CEO gets 50 percent while the remaining half is shared by the CFO and the Property Manager. After the changes in the composition of the board, the executives elected to have their portions of the payout made to them.

On 28 April, board chair Mogopa received a letter from the CEO demanding his cut of about P15 million. Another letter came from Property Manager Baalakani Nlumbile on 7 May. “A notice of declaration, in terms of the long term incentive plan was delivered to you on the 28 April 2020,” Nlumbile’s letter read. “Upon receipt of the notice you were obliged in terms of clause 9.8.1 to respond in writing within five working days, providing your computation of the carry pool. I am therefore left to assume that you do not dispute the computation that I have provided.”

Accordingly, Nlumbile said he expected full payment of his share of the carry pool on or before close of business on 19 May 2020.

However, the board never agreed to such claims but instead claimed that the CEO had manipulated the LTIP. As a result, Letlole announced that criminal charges against the CEO had been laid with the Serious Crimes Squad of the Botswana Police Service. The company has also engaged Armstrong Attorneys. According to Mogopa, an investigation into the conduct of the CEO has been conducted. Mogopa says the ambit of the forensic investigation extended to a review of all relevant company policies.

It is the same criminal charges that the CEO will face disciplinary hearings for. But Chenjere-Mutiswa is insisting on pursuing his P15 million claim and has engaged Collins Chilisa Consultants to that end.