Outgoing Letshego execs are swimming in it

In settlements that beat logic, top flight executives at Letshego are bidding farewell to the company with golden handshakes after a decline in shareholder value under their watch, writes KEABETSWE NEWEL

Three former members of Letshego Holdings top management collectively pocketed a cool P10 million last year, the company’s latest annual report shows.

Letshego’s Earnings Per Share (EPS) further declined to 20.7 thebe from the 29.8 thebe per share seen during the 2017 reporting period.

Chris Low stepped down as the Group Managing Director in August last year after almost five years with the company. No detailed explanations were given for his resignation. However, there was talk that the board had its reservations about Low, a man who had previously worked at world renowned financial institutions like the American multinational investment bank and financial services company, Goldman Sachs.

Those in the know say the board was not in agreement with Low’s strategy and the shareholder value he created but the official communique said Low was leaving to pursue other interests, a common phrase in the corporate sector used even when people have been pushed out. Shareholders have not been getting increased benefits in terms of Net Asset Value (NAV) and Earnings Per Share (EPS).

Return on Equity (ROE) for the year ending 31December 2018 was 12.2 percent, having declined from the 16.7 percent that was seen during the 2017 fiscal period. ROE is a measure of a company financial’s performance calculated by dividing net income by equity. Because shareholders’ equity is equal to a company’s assets minus its debt, ROE could be thought of as return on net assets. ROE is considered a measure of how effectively management is using a company’s assets to create profits.

Further, Letshego’s financials show that Return on Assets (ROA) fell by 3 percent to settle at 5 percent during the current reporting period. In 2017, ROA was at 8 percent. ROA is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources. It is commonly defined as net income divided by total assets. When a company is managed efficiently, ROE and ROA should rather be on the rise.

Letshego’s Earnings Per Share (EPS) further declined to 20.7 thebe from the 29.8 thebe per share seen during the 2017 reporting period. The decline in EPS was equivalent to 31 percent, leadingsources to conclude that Low was forced to resign because of his under-performance. Yet the board then paid Low a staggering P6,399,925 in total. P2,703,176 was his basic salary for that year while P3,696,749 was his net settlement.

After Low’s departure, Smit Crouse was appointed Group Chief Executive Officer on a long-term contract on 24 September 2018. Regrettably, Smit was only able to serve until the end of March 2019 when he unexpectedly tendered his resignation. However, for the few months that he was with Letshego, Crouse was paid over P1 million as salary.

Colm Patterson, current Group Chief Financial Officer, is also leaving Letshego to pursue personal interests, having been with the Group for more than 11 years. In 2018, Patterson was paid P2,250,000 as salary. The board is yet to announce how much he will or has pocketed as net settlement.