SA CEOs rake it in

By MARIANNE MERTEN Time of article published May 1, 2014

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Cape Town -

The CEOs of South Africa’s top 50 companies in 2012 took home an average of R49 million, including share options, bonuses, incentives and salaries - effectively more than tripling their individual earnings since 2007, without necessarily being judged on performance.

That’s according to Kaylan Massie, one of the authors of “Executive Salaries in South Africa: Who Should Have a Say on Pay?” addressing the Cape Town Press Club on Wednesday.

Among the top earners were Shoprite CEO Whitey Basson, who gets a guaranteed R40.9m - “He earns that every year regardless of whether Shoprite performs or he performs,” she said - and outgoing Naspers CEO Koos Bekker, who in 2012 earned R1 billion through various share options, although according to the company annual report, he had no income or pension at all.

“I had to do the calculations. As a shareholder, if you just read the (company’s) annual report, you will have no idea,” said Massie pointing out South Africa was lagging behind international trends on the disclosure and regulation of executive pay and in shareholder oversight.

Describing such incomes as “obscene”, Massie said simplistic rand-dollar conversions to compare South African and overseas executive incomes meant little. “South African executives are the second-highest paid in the world on purchase power. It’s not accurate to simply use the rand-dollar exchange. You have to look at what the salary can purchase - which is more here (in South Africa).”

As companies have different reporting seasons, 2012 is the most recent year for which annual reports were available for an across-the-board comparison. 2012 is also the year when labour strikes hit South Africa’s platinum belt, where workers demanded a R12 500 monthly salary - and police killed 34 striking miners in August that year. The R12 500 monthly wage demand is still on the table in the more than three month-old old strike led by the Associated Mineworkers and Construction Union (Amcu).

However, in wage settlements in other sectors over the past year, workers on average accepted increases related to inflation, or just above, in multi-year wage deals. For others the labour department sets sectoral wages: for domestic workers in urban areas it’s R 1 877.70 a month for a 45-hour working week, or R1 618.37 a month in other areas, since late last year.

In contrast, many of the country’s top CEOs have received double and even triple digit percentage increases in their cash and benefits only packages, excluding bonuses, incentives and the like, between 2007 and 2012.

This includes:

* Impala Platinum - R13 138 000 in 2012, up from R6 480 000 in 2005, or 102.5 percent;

* Anglo Platinum - R17 629 795 in 2012, up from R5 333 999 in 2005, or4 230.52 percent;

* Gold Fields - R19 943 000 in 20012, up from R6 180 085 in 2005, or 222.7 percent;

* Harmony - R7 296 000 in 2012, up from R2.1m in 2005, or 247.43 percent;

* Discovery - R8 707 000 in 2012, up from R2 737 000 in 2005, or 218.12 percent;

* Shoprite - R40 964 000 in 2012, up from R7 825 000 in 2005, or 423.5 percent;

* Woolworths - R11 149 000 in 2012, up from R4 794 000 in 2005, or 132.56 percent;

* Netcare - R11 798 000 in 2012, up from 3 478 000 in 2005, or 239.22 percent.

CEOs of companies in which the state holds significant shares, like the listed Sappi, Sasol and Telkom, also scored: Sappi paid its CEO a R11 760 600 cash and benefits only package in 2012, up from R10 370 466 in 2005.

At Sasol the CEO package increased to R31 881 000 from R9 227 000 in 2005.

In 2012 Telkom paid its CEO 73.13 percent more - R12 067 321, up from R6.97m in 2005 cash and benefit package only.

Many other company CEOs have received more modest increases over the seven-year span, around 21 percent to 73 percent, but some CEOs actually took a pay cut. These include Absa, now Barclays, CEO Maria Ramos, who earned a cash and benefits only package of R6 657 681 in 2012, down 24.34 percent from the R8.8m in 2005 and Tiger Brands CEO Peter Matlare, who in 2012 earned R5 792 000, or 47.82 percent less than his predecessor’s R11.1m.

Hardest hit appears to be Investec Ltd CEO Stephen Koseff, whose 2012 cash and benefit only package stood at R5.4m, or 64.94 percent down from his predecessor’s R15.4m package.

The CEOs of BHP Billiton, Sanlam and Standard Bank in 2012 also took a dip in their multi-million rand annual cash and benefits only package, compared to the 2005 earnings in that position.

Massie said often the CEO packages are not linked to performance, and frequently are determined by company remuneration committee which include the CEO. As the King corporate governance rules do not actually ban this practice - the principles of good ethics are not binding, in any case - other measures were needed.

This included having employees participate in company remuneration committees, as happens in several European countries, greater shareholder oversight and a revision of the personal tax regimen.

It should also become compulsory to publish in the annual report the income gap between the highest and lowest paid, she added.

South Africa has one of the highest rates of inequality in the world.

Statistics South Africa in its recent “Poverty Profile of South Africa” shows 23m South Africans in 2011 were living below the poverty line of R620 per person per month - even if the levels of this grinding poverty declined to 46 percent in 2011, down from 57 percent in 2006.

Poverty levels decreased between 2000 and 2006, but increased between 2006 and 2009, the StatsSA report noted.

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