Old Mutual fat cats don’t deserve our money

Read in The Times this morning that Old Mutual CEO Julian Roberts accepted that poor decisions by management, related to its international expansion strategy, led to the comapny’s current problems. But when asked if management would, as a result, forgo bonuses this year, he was willing to say only that bonuses would be “lower across the group”. Roberts’ attitude perfectly illustrates the corrupt nature of executive compensation. When times are good, the executives take the credit and pay themselves big bonuses. When times are bad, they (sometimes) accept responsibility (if we’re lucky), but still pay themselves bonuses. The bonus, which is supposed to reward performance, becomes an inalienable right.

Get this. Since my last post about Old Mutual, the company’s share price has dropped below R5 – a decline of 74% since January 2008. In comparison, rival Sanlam’s share price is down only 22%. Management admits that their own mistakes are behind the share price drop. Why should anyone get a bonus for this mess?

Last year, Roberts (then finance director) walked away with a cool 1.069 million British pounds – about R15 million at today’s exchange rate. That included a performance bonus of 344 000 pounds. Jim Sutcliffe, then CEO, scored 1,599 million pounds (R23.8 million) in total compensation, including a performance bonus of 498 000 pounds, before he was unceremoniously dumped and replaced with Roberts. All this while Old Mutual was writing off massive losses in its US business, and its share price was tanking.

Can you believe these guys? They have destroyed tens of billions of rands in value to shareholders, and brought a once venerable South African company to its knees – yet they still think they deserve a bonus?

I hold some Old Mutual insurance policies and investments. It would not be in my own financial interests to cash them in now, so I’ll hold on to them. But I will never, ever, do any new business with this company again, you can be sure of that. They don’t deserve my, or any other South African’s, money.

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2 Responses to Old Mutual fat cats don’t deserve our money

  1. Bob says:

    Boycott old Mutual!

  2. Bob says:

    Old Mutual grabbed a massive chunk of my retirement savings I have with them last year. So for them it seems to be a case of ‘why worry we just take the retirement savings of our customers, bail ourselves out, and pay ourselves fat bonuses with our customers retirement savings’. My retirement ability has been massively set back. Thanks Old Mutual.

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