(Bloomberg) -- Vodacom Group Ltd.’s black shareholders said they oppose a 40 billion rand ($2.3 billion) payout to an ex-employee as it will wipe out their future earnings and investment in the wireless carrier.
The investors who own a minority stake in Vodacom through YeboYethu Ltd., 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.
Vodacom declined to comment and YeboYethu didn’t immediately respond to requests for comment outside of office hours.
Vodacom is challenging a ruling by the Supreme Court of Appeal that Kenneth Makate, a former employee, be paid between 29 billion rand and 63 billion rand 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.
They argue that Makate should instead get 47 million rand 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.
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