Armscor board takes issue with reading of annual report

Armscor’s Board of Directors says it is concerned at what it says is an inaccurate interpretation of its financial statements with reference to a reported 89% salary increase received by CEO Sipho Thomo.
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The board, in a statement, says Thomo received an increase of 6.8% in the year to March 2008 and 13.26% for the year to March.
But Democratic Alliance MP David Maynier says Armscor`s 2008/2009 annual report clearly shows Thomo`s salary increased from R1.22 million to R1.45 million and his benefits went from R108 624 to R 1 391 395. “That is a total increase in remuneration from R1.7 million to R3.27 million, which amount to an increase in 89%, in the 2008/2009 financial year,” he said in a replying statement.
Maynier says the explanation provided was that the remuneration increase was as a result of a salary increase of 13.26% in 2008/2009; a performance related bonuses payments in the amount of R236 667.53 for the 2006/2007 and 2008/2009; and a once-off restraint of trade payment.
Armscor confirms the last, saying it “entered into a restraint of trade agreement with the CE based on the need identified by the board in order to protect the interests of the company given the nature of our business.
“Sixty percent of the total restraint amount was awarded and paid at the inception of his employment contract.”
Maynier questioned the payment saying they are usually paid to individuals who are about to exit an organisation.
“Given Thomo`s dismal performance, it would seem that his departure would have created a significant opportunity to rejuvenate the top management and leadership at Armscor,” Maynier said.  
He says the payments as well as the “performance bonuses” came at a time when there were serious delays in major capital acquisition projects for the defence force;
the balance sheet reflected a shrinking in surpluses from R44 million in 2008 to R37.9 million in 2009 and an increase in government transfer payments from R415 million in 2008 to 479 million in 2009; and there was a concern about the long term ability of Armscor to deliver on its mandate to acquire defence material for the Department of Defence.
In addition Thomo had to receive counselling for a poor management style and cost the company R1.8 million in grievances.
But Armscor`s board, headed by former North West Province premier Popo Molefe said they were satisfied Armscor was still delivering on its mandate.
“We are once again pleased with the performance of the organisation lead by Mr Thomo and Armscor has continued to receive an unqualified audit report by the Auditor-General.
“We are quite optimistic about the future of this organisation and appreciate the valued and continued support from our stakeholders.”

Pic: Amscor logo