FirstRand awards chief R38m after profit grows


Renee Bonorchis

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For the 2011 financial year FirstRand chief executive Sizwe Nxasana received a total of R38 million, which included a salary and bonus package of R15.1m, a deferred bonus of R4.5m and a gain from a share trust of R18.4m. Photo: Simphiwe Mbokazi

FirstRand’s Sizwe Nxasana was South Africa’s highest-paid bank chief executive after the nation’s second-largest financial services company more than doubled its full-year profit following the sale of assets.

For the 2011 financial year, Nxasana, 54, received a total of R38 million, which included a salary and bonus package of R15.1m, a deferred bonus of R4.5m and a gain from a share trust of R18.4m, according to the Johannesburg-based group’s annual report, published last week. Nxasana’s share-trust payment stemmed from his original appointment grant, said Sam Moss, the lender’s spokeswoman, adding Nxasana was awarded another 892 066 shares in 2010, a third of which would vest next year.

At yesterday’s price those shares are potentially worth another R17.3m to Nxasana, bringing the total value of his awards in fiscal 2011 to R55.3m.

Nxasana, the chief executive since January 2010, having joined the group in 2006, was awarded a package valued at R45m last year. His compensation topped that of Africa’s largest bank, Standard Bank, which increased the pay of chief executive Jacko Maree by 9.7 percent in 2010 to R6.53m. Nedbank raised chief executive Mike Brown’s total compensation 63 percent in 2010 to R12.46m and Absa more than doubled chief executive Maria Ramos’s pay and incentives to R27.5m after the lender’s profit rose 19 percent.

On September 13, FirstRand said it would pay a special dividend of 70c a share after net income rose to R20.1bn in the 12 months to June, from R9.44bn a year earlier. FirstRand’s first special dividend since its creation in 1998 came after the company sold its stake in insurer Outsurance Holdings for more than R4bn and spun off its Momentum Group insurance business.

“FirstRand was the best performing of the big four banks over the past year, hence you would expect the chief executive to be rewarded accordingly,” said Patrice Rassou, the head of equities at Sanlam Investment Management, which holds shares in the lender.

To evaluate executive pay, the bank’s compensation committee noted in the annual report that FirstRand achieved so-called normalised earnings from continuing operations of R10.1bn, an increase of 22 percent, and produced a normalised return on equity of 18.7 percent. Growth in profit after tax, risk appetite, efficiencies, customer service and the empowerment of black people were other criteria used to determine executive pay, the compensation committee wrote. – Bloomberg

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