Absa in hot water over CEO’s R148 million payday

Absa faced opposition from some of its largest shareholders over a proposal to boost executive pay at the South African lender’s annual general meeting on Tuesday.

More than 43% of the bank’s shareholders, which include institutional investors such as the Public Investment Corporation and BlackRock, voted against the report, Absa said in a regulatory filing. 

The move will allow shareholders to raise concerns and recommendations on the pay report because more than 25% of the members opposed the non-binding advisory vote, Absa said.

At the heart of the issue is the R148 million pay package of its new CEO, Kenny Fihla, for 2025, and specifically his R23.2 million bonus.

In May, the world’s largest proxy-advisory firm, Institutional Shareholder Services, flagged the compensation proposal, saying the explanation given for not pro-rating his bonus to time served during the year was “not sufficiently compelling.”

The payout included a R98.5 million buyout to compensate Fihla for unvested equity he forfeited when he left rival Standard Bank.

At last year’s AGM, about 12% of shareholders voted against the implementation of executive remuneration, a sign of growing shareholder unease at the spending spree to recruit top talent.

Following Fihla’s move from Standard Bank, he has lured a string of top bankers, including the country heads of Deutsche Bank, Saloshni Pillay, and Rothschild & Co’s Giles Douglas.

Two of his former Standard Bank colleagues, Zaid Moola and Clive Potter, also took up top positions at Absa’s investment bank. 

Absa’s remuneration committee defended the move as a necessary upfront investment to anchor a revised pan-African strategy. 

However, institutional investors are increasingly opposing large sign-on incentives that are not immediately aligned with performance, especially in a country hyper-sensitive to wide wage gaps.