Pretoria - Executive directors of South African companies now earn almost 130% more than five years ago.
This is according to the first report by PricewaterhouseCoopers (PwC) on the remuneration of directors of large and medium-sized JSE-listed companies.
PwC director Gerald Seegers, who wrote the report, says the financial crisis in the United States and the subsequent global economic collapse will certainly affect remuneration packages.
In South Africa one sees public outrage and the perception that everyone that has anything to do with management is being paid too much.
Sectors reflecting smaller total remuneration packages in 2008 include industry, food and retail.
The total outliers are, however, the mining and banking sectors.
The median remuneration package for directors in a mining company in 2008 was R25m-odd, and R12m in the banking sector.
Banking sector performance bonuses increased by 161% over the past five years.
The construction industry also showed a few interesting trends in recent years.
Projects associated with the World Cup soccer tournament have kept the industry's wheels well oiled.
This was so much so that the median remuneration package for directors in this industry shot up by 347%.
In 2008 a director in the industry was paid around R6m a year in total. The year before it had been less than R4m.
In the case of the food sector directors have a difficult task, Seegers reckons.
They have to keep shareholders happy and bring to the market food that is affordable for a broad spectrum of the population.
Over the past five years directors' basic median salary has risen by 21%, benefits by 41% and the total median remuneration package by 38%.
There was a slight increase in 2007 but this came down last year and should continue declining if one takes into account the shrinking profits of companies, Seegers predicts.
In the media industry directors were remunerated more modestly, with a total median remuneration package of R3m.
The figures for the luxury goods sector were distorted by the 2008 unbundling of BAT and its listing on the JSE.
This resulted in the median remuneration soaring to about R60m, compared with less than R10m in 2006 and 2007.
The PwC report also shows that from 2004 to October last year there was a 247% rise in profits directors made on their shares.
Seegers reckons that with the economic downturn there is a good chance that directors will not exercise their share options for the next couple of years.
Their performance bonuses have risen by 137% over five years, and in the same period benefits by 52%.
Seegers says South African companies are internationally at the forefront of corporate governance. The remuneration committees of JSE-listed companies have begun to apply many of the changes now being enforced worldwide.
The remuneration packages that directors earn globally are under keen scrutiny, and compulsory changes could be on the cards, Seegers believes.
One of these is the way in which directors are being compensated by means of share options.
The report has not investigated any measures obliging directors to return portions of their remuneration packages if the company goes under or ends in difficulties as a result of poor decisions.
"The role of remuneration committees is becoming increasingly important where directors' performance must be measured in terms of the value shareholders receive"
Seegers says new ways of judging good or bad performance are being sought.
-Sake24