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Marcus slams executives over pay

Johannesburg - SA Reserve Bank governor Gill Marcus lambasted high executive salaries and perks at a function on Wednesday.
   
Speaking at a Power Business breakfast function at the Johannesburg Country Club, she said while double-digit pay increases for workers raised inflationary concerns, it was not just a worker issue. She called on managers to also play a role in helping reduce economic instabilities.
   
"It is not just a workers' problem, the tone is set by bonuses and executive pay," she said.

This comes at a time when unions have threatened and undertaken strike action around the country to get pay increases of close to 10% - well above an inflation rate of just 4.6%.

She warned that if these settlements were not matched by improved productivity, there were likely to be inflationary consequences.

"The way we deal with reward is a global question, but it is definitely an SA issue," she said.
 
Standard Bank outgoing chairperson Derek Cooper, for example, recently came under severe shareholder criticism for receiving a golden handshake of R7.5m.

The reward was finally granted, but many commentators have raised severe concerns about transparency around executive pay in SA.

"You cannot have a different approach when you look at executives and workers, and it leads to the kinds of differences they have," said Marcus.
 
Marcus called for higher employment in a lower inflation environment.

"The public protests seen abroad in Greece and elsewhere do not reflect the same demands as in South Africa for higher wages.

"In Europe the protests are against losing jobs, and the severe austerity measures that have been introduced to reduce double-digit sovereign debt," Marcus said.

SA needs global financial smarts

However, South Africa could not put employment creation as its priority, and then at the same time demand and agree to wage increases that were double the level of inflation.

"In this regard, the behaviour of management is critically important and outrageous increases or bonuses are simply not acceptable as management has to lead by example."
   
Marcus said that according to a recent survey, executive pay had risen during the financial crisis and global recession.

"In its (the survey's) sample of 326 listed companies and parastatals, it was reported that CEO remuneration increased by 11.5% on average from 2006 to 2009. "
  
Marcus said South Africa had to achieve a greater understanding of the global financial crisis and its consequences.

"This requires greater interaction and a common purpose determining the appropriate course of action that we, as a nation, need to take to stave off the worst ravages of the crisis."

Marcus said that the "remarkable period of togetherness" that the nation experienced during the 2010 FIFA World Cup needed to endure beyond the sporting event.
  
"It must permeate other aspects of society," she said.

   - Sapa & I-Net Bridge
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