YeboYethu said that the payment would lead to the suspension of dividends to some 80,000 black indirect shareholders of Vodacom. (Gallo Images/Alet Pretorius)
Vodacom’s black economic empowerment share scheme, YeboYethu, said it opposes a multi-billion rand payout to an ex-employee as it will wipe out it’s shareholders future earnings and investment in the wireless carrier.
The investors who own a minority stake in Vodacom through YeboYethu, an initiative set up in 2008 to increase black ownership, have asked the Constitutional Court to allow them to join the mobile operator’s case as an amicus curiae.
Vodacom is challenging a ruling by the Supreme Court of Appeal that Kenneth Makate, a former employee, be paid between R29 billion and R63 billion for a call-back service idea he proposed to the company’s product-development team when he worked in its finance division in the 2000s.
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They argue that Makate should instead get R47 million for his ‘Please Call Me’ idea, an amount previously determined by the mobile operator’s Chief Executive Officer Shameel Joosub, according to court papers seen by Bloomberg.
“Payment of compensation of such a high amount would have disastrous consequences for YeboYethu Investment Co. and its shareholders,” according to the documents. The payment would likely lead to the suspension of dividends to some 80,000 black indirect shareholders of Vodacom for many years, the filing said, and cause a so-called trigger event, where the equity value of Vodacom Group shares falls below the debt in YeboYethu.
The Constitutional Court previously rejected an attempt by Vodacom’s UK-based parent Vodafone Group Plc to join its case.
In papers filed to the court in February Vodacom said the amount determined by the Supreme Court of Appeal would have “devastating consequences” for the mobile-network operator, its employees and its investors.
Vodacom declined to comment and YeboYethu didn’t immediately respond to requests for comment outside of office hours.