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Rein in bonuses, Gigaba asks

Jun 17 2012 10:40
Antoinette Slabbert

Pretoria – Go slow on management bonuses!

This was Public Enterprises Minister Malusi Gigaba’s message to Eskom on Friday.

Total remuneration of the parastatal’s board and management team last year amounted to a full R54m.

Zola Tsotsi, who chairs the Eskom board, in responding to a question at the announcement of the electricity giant’s financial and operating results on Thursday, confirmed that provision had again been made for management bonuses “based on Eskom’s performance”.

He did not provide any details.

Strong reaction was previously elicited by the awarding of hefty bonuses to Eskom’s top management while consumers were experiencing sharp electricity tariff hikes and large businesses were being rewarded for suspending production so as to relieve pressure on the electricity supply.

Gigaba answered other questions and then referred back to the issue of bonuses. He said the shareholder (government) was unhappy about the bonuses.

Gigaba said government had asked everyone to scale down and it would sent the right message if the proper decision was taken.

His department had appointed a consultant to develop new remuneration guidelines for all state-controlled companies.

He asked for a disciplined approach to remuneration and bonuses in light of the country’s huge inequalities. 

Remuneration is important in motivating people and rewarding performance, but sensitivity toward the poor needed to be demonstrated, he said.

According to Eskom’s integrated annual report, senior management’s remuneration is linked to Eskom’s performance and the contribution made by a specific individual.

Senior management’s basic salaries are supplemented by short- and long-term incentives.

Remuneration packages are put together line with local and international yardsticks, while keeping the shareholder’s guidelines in mind. The board approves the packages for the financial director and executive directors, but the shareholder has the final say regarding that for the chief executive, Brian Dames.

In the financial year to March 31 the management team’s salary increases were on average below the inflation rate.

Dames’s total package in the financial year was almost R8.3m, compared with R7.5m the year before. Paul O’Flaherty, the financial director, received almost R5.5m, compared with almost R5m the previous year.

The other eight members of Eskom’s executive team together earned around R34m, compared with R29m in the previous financial year.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.



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