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South African lawmakers urge Steinhoff to reconsider bonuses for board

South African lawmakers on March 28 said a proposal to pay bonuses to board members of embattled retailer Steinhoff International Holdings NV appeared "unseemly and bordered on being provocative" and urged a rethink of the plan.

In addition, legislators decided to subpoena Steinhoff's former CEO, Markus Jooste, who had declined an invitation to appear before parliamentary committees conducting hearings into Steinhoff, which revealed on Dec. 6, 2017, apparent accounting irregularities that sent it scrambling to shore up its finances and its stock into freefall. Shares of Steinhoff have lost more than 90% in value since the disclosure, wiping out more than €11 billion in market capitalization.

A second parliamentary hearing was held March 28 into events at the Stellenbosch-based company, owner of Mattress Firm, which operates mattress seller Sleepy's in the U.S., Conforama in continental Europe, and Poundland and Bensons for Beds in the U.K., among others.

Lawmakers took aim at Steinhoff's remuneration plan, which is due to be put to shareholders for approval at an annual general meeting in Amsterdam on April 20. Steinhoff is incorporated in the Netherlands.

According to the agenda for the meeting, the company proposes to award Heather Sonn, chairman of the supervisory board, a one-off payment of €200,000 "to cover the additional work undertaken during the period since the accounting irregularities were identified." That is on top of her proposed salary of €300,000.

Stefanes Booysen, a director, is in line to receive a one-off payment of €200,000 for his work since the scandal erupted, and another director, Johan van Zyl, could pocket a one-off sum of €100,000. Sonn, Booysen and Van Zyl are members of a three-person independent committee established to steer the company following the Dec. 15, 2017, resignation of Christo Wiese as chairman.

"Although they recognized that those serving on the Steinhoff supervisory board may not be guilty of any wrongdoing and are entitled to be paid for their services, given the huge losses suffered by such large numbers of people with the collapse of the company shares, the committees think the bonuses are unseemly and bordered on being provocative," said a statement posted on the government website following a briefing before members of finance, public accounts, public administration, and trade and industry committees.

A spokesperson for Steinhoff did not immediately respond to a request for comment from S&P Global Market Intelligence. However, in a statement emailed to South African news website fin24 on March 23, a spokesperson for Steinhoff was quoted as saying that Sonn, Booysen and Van Zyl had been appointed to oversee the crisis.

"In doing so [they] were required, inter alia, to make extraordinary time commitments and be readily available for unscheduled ad-hoc meetings, deal with stakeholders such as regulators, investors and shareholders. The independent sub-committee has also in a short period of time restructured the management and supervisory boards," the spokesman said. "Accordingly, the proposed amounts are in recognition of the extraordinary effort that they have made (and continue to make), in order to stabilize the company and restore value to investors."

Jooste's failure to appear before the briefing was not a surprise. In a letter dated March 23 and addressed to Finance Committee Chairman Yunus Carrim, a copy of which is posted on the website of news service eNCA, lawyers representing Jooste said their client was not in a position to assist the committees and that doing so would undermine his right to a fair trial.

Steinhoff said Jan. 31 that it had reported Jooste to South Africa's Directorate for Priority Crime Investigation, known as the Hawks, on suspicion of committing criminal offenses in relation to the alleged accounting irregularities.

The parliamentary committees said they would give Ben le Grange, Steinhoff's former CFO, 10 days to decide whether to appear at their next briefing on the furniture, household goods and general merchandise retailer in August. If he declines or fails to reply, he, too, will be subpoenaed.

Louis Strydom, who heads the African forensic services unit at PwC, which is conducting an investigation of Steinhoff's accounts, told lawmakers the firm hoped to complete its probe by the end of 2018, Reuters reported.