THE shocking deaths of 44 miners at Lonmin's Marikana
platinum mine in North West province earlier this month has put the thorny
subject of excessive executive pay back on the news agenda.
According to news reports this week, Lonmin's outgoing CEO
Ian Farmer was paid about R1.2m a month last year while a rock driller received
about R10 500 a month cost-to-company.
The rock drillers' pay figure was provided to the media by
trade union Solidarity. However, it has been strongly refuted by workers, who
insist that they get paid about R4 000 a month.
According to Lonmin's 2011 annual report Farmer, former
chief financial officer Alan Ferguson and financial officer Simon Scott
received salary packages totalling R38m last year.
City Press reported that in comparison, the 4 252 rock
drillers in Lonmin's employ would together earn total pay of about R44m for
this financial year.
Scott was appointed Lonmin [JSE:LON] CEO this week, replacing Farmer
who is said to be ill. Farmer was admitted to hospital shortly before the
carnage at Marikana.
I believe it is an indictment of South African society that
some miners' kids can go to school famished when company executives pay
themselves millions of rands in salaries, bonuses and share options.
South Africa, according to the United Nations Children's
Fund (Unicef), is home to nearly 19 million children, many of whom are
vulnerable. Unicef says two-thirds of all South African children live in
poverty – many in homes with unemployed, single, chronically sick or elderly
parents and caregivers.
Even so, excessive executive pay in South Africa continues.
It also happens at a time when the matter has received intensified scrutiny in
South Africa and the developed world.
Large pay inequalities are damaging for South African
business, the economy and society as uneven societies undergo greater levels of
social turbulence and doubled sickness rates.
The pay gap between executives and workers could nourish
extensive emotions of raw injustice, and weaken faith in local businesses.
Since the police guns went off in Marikana, there has been
an outpouring of citizen commentary on the necessity to combat extreme
executive pay. In South Africa, the issue of executive pay has been bubbling
under for some time now. It has always been a delicate matter.
It would be foolhardy for South African company executives
to ignore the growing discontent regarding their salaries. I think they should
attempt to do something about it sooner rather than later.
I have always thought that once it became compulsory for
listed South African companies to reveal their pay packages in their annual
reports, their boards wwould think carefully about what they pay executives.
But this has not been the case.
South African executives know how to play the media. Once a
shocking pay package story hits the headlines, they just lie low for a couple
of days, forcing the furore over their salaries to die down.
There were reports a few years back that Whitey Basson, the
head of the JSE-listed Shoprite Holdings [JSE:SHP], had been paid an unbelievable remuneration
But nothing was done about this though one would have
thought it would spark some nationwide movement and outcry.
The worst has happened instead. Executive pay has increased
faster than the wages of ordinary workers in the past 10 years.
South Africa's trade unions and the government have done very little to
What happened in Marikana was sad and still is. But it
should provide opportunities for South Africa's company executives to fix
It should prompt them to find ways and means of making sure
that workers are paid better salaries, so that their own pay packages need not
come under serious scrutiny.
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