MTN SA says it will not make any additional performance bonus payments to employees for the 2014 financial year.
This follows a protest staged by disgruntled employees late last week at the company’s head office, demanding performance-linked pay.
MTN’s local unit has struggled amid an increase in competition and a 36% decline in interconnect revenue due to lower mobile termination rates (MTRs), the group noted in its previous reporting.
Earlier in March, the mobile operator reported a 3.9% drop in local revenue for the year ended December 2014, to R38.9 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) slipped to R12.5 billion, from R14 billion before.
MTN said that in a meeting held on Wednesday 11 March to hear employees’ grievances around the payment of 2014 performance bonuses, the group undertook to provide feedback to employees on their bonus proposals.
The group said in a statement on Monday (16 March):
“MTN SA confirms that there will be no additional performance bonus payments to employees for the 2014 financial year.
This decision follows a request by general and supervisory level employees for the company to consider granting them an ex gratia payment or higher bonus payment, as they deem the payment of 4% of their annual pensionable salary insufficient.”
“As with any company, MTN SA is expected to deliver a certain level of growth in order to declare a performance bonus. In the previous financial year, MTN SA did not deliver the required growth and thus was unable to declare a performance bonus.”
It said that while MTN is one group, the underlying operating companies, including MTN SA, are independent of each other and each has its own board, expectations and responsibilities to shareholders.
“During 2014, MTN Group continued to work hard to deliver on its vision. The 2014 financial year however, proved to be one of the most difficult for the Group.”
“As a result, across the 22 operating companies evaluated for performance bonuses, only 15 entities qualified for payments and seven, including MTN SA, did not qualify for any performance bonus payment,” MTN said.
Explaining the payment of the 4% payment to employees, MTN SA chief human resources officer, Themba Nyathi said: “MTN is fully aware of the diminished line of sight at the lower levels and in lieu of this, ensures that there’s a guaranteed portion of any performance bonus.”
“That is, even if an Opco does not qualify for a bonus payment, this doesn’t prejudice general and supervisory staff at job levels 1 and 2.”
“As a result, in a year when a bonus is declared, the first 4% of the calculated bonus percentage is the guaranteed 4%. In the absence of a performance bonus being declared, which is the case for MTN SA; employees at these levels are guaranteed a 4% payment. This is a group-wide policy, and applies across all MTN operations,” Nyathi said.