Cape Town - Total remuneration levels for executive directors on the JSE continue to increase and vary considerably from industry to industry and across large, medium and small-cap companies, according to a report by PwC for the period May 1 2012 to April 30 2013.
At the end of April this year there were a total of 1 024 executives – an 11% decrease compared with the previous reporting period. Except for the basic resources and services sectors, reasonable decreases were shown in the number of executive directors.
White representation among executive directors decreased from 81.5% in 2002 to 72.6% in 2012, while African representation increased slightly from 10% in 2002 to 12.3% in 2012.
The representation of Coloureds increased from 3.4% in 2002 to 4.6% in 2012, and the representation of Indians increased from 5% in 2002 to 7.3% in 2012.
The percentage of women operating in executive roles has increased from 8% in 2012 to 10% in the current reporting period.
The report concludes that executive remuneration is increasingly coming under scrutiny from shareholders, investors and other stakeholders.
“New legislation, regulations and corporate governance principles are giving shareholders and institutional investors more say on executive pay,” said Gerald Seegers, director for human resources services at PwC Southern Africa.
“Our report confirms that in many cases there has been some level of restraint on executive pay recently, but probably not at the pace or level that we expected. South African executives must lead the way, and there is a genuine intent on the part of our business leaders to make a difference.”
Forgo a pay increase
One of the avenues being considered in industry is for executives to forgo a pay increase and redistribute the funds to lower-paid employees to close the pay gap and kick-start the monitoring process going forward.
“The issue of the pay gap is gaining momentum both locally and internationally with the risk that if not properly understood and dealt with, it could result in regulatory intervention that could have undesired consequences,” said Seegers.
“Companies are trying harder to explain to shareholders and other stakeholders their executive remuneration programmes.”
As far as the total guaranteed pay awarded to executives Richard Lepeu of Richemont [JSE:RCH], came out tops among the best paid executives in South Africa. Last year he was paid more than R50m.
PwC said that as a rule of thumb the total guaranteed pay represented around one third of the total value of the remuneration paid to executives each year. The other two-thirds comprised short- and long-term incentives, which often involve shares or options.
Other Richemont executives, who were also among the top 12 best paid executives in the country last year, are Johann Ruper (R40m), Gary Saage (about R28m), Frederick Mostert (about R22m) and Martha Wikstrom (about R22m).
Despite being paid in rands Whitey Basson, the chief executive of Shoprite [JSE:SHP] still managed to be under the top 12 best paid executives in South Africa last year. His total guaranteed pay was more than R40m.
Basson also heads the list of top paid executives of companies with a primary listing on the JSE.
Raking in cash
Other top earners include Marius Kloppers of BHP Billiton [JSE:BIL] with a total guaranteed package valued at about R31m and Cynthia Carroll whose package at Anglo American [JSE:AGL] was guaranteed at about R24m.
Graham Mackay, the former chief executive of SABMiller [JSE:SAB] had a package of R27m and Malcolm Wyman, the former finance director of SABMiller a package of more than R22m.
Mark Cutifani of AngloGold Ashanti had a package of R16m, Marius Jooste of Steinhoff one of R15m, Jerome Smith of Cipla Medpro one of R14m and Thys Visser of Remgro one of R12m.
Nick Holland of Gold Fields had a package of R11m, Jacques Schindehütte of Telkom one of R11m, Brian Joffe of Bidvest one of R10.5m and Srinivasan Venkatakrishnan of Anglogold Ashanti one of more than R10m.
Sifiso Dabengwa of MTN had a package of R10m, David Constable of Sasol a bit less than R10m and David Robinson of Aveng also just a bit less than R10m.
Demand for higher packages
According to Seegers the shortage of skilled and experienced CFOs means that incoming CFOs are demanding higher packages.
The median total guaranteed package (TGP) for executive directors of large-cap basic resources companies is R4.9m.
Large-cap companies in the financial services sector had modest increases in levels of TGP for the CEO and executive directors, driven largely by inflationary increases.
“The decrease in the TGP for CFOs (2012:R3.4m; 2011: R3.6m) indicates the depressed state of large financial sector businesses,” according to the report.
There has been a significant drop in the TGP for large-cap CEOs at industrial companies (2012: R10m; 2011: R17m).
“Times have been tough, and incoming CEOs are accepting lower packages,” explained Seegers.
TGP of CEOs of large-cap companies in the services sector were about R5,4m in 2012 compared to about R6,1m in 2011.
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