SA bosses not on fat cat salaries

2010-09-08 14:24

Johannesburg – South African business executives are not being paid too much in relation to their global peers, but the wage gap between executives and labourers could cause resentment.

This is according to Gerald Seegers, director of human resources at advisory firm PricewaterhouseCoopers (PwC), who was speaking at a corporate governance conference in Sandton on Wednesday.

"Relative to their global peers, SA executives are not paid too much," said Seegers.

PwC conducts an annual study into the remuneration trends of listed companies.

In the South African context, said Seegers, the politically sensitive issue is the wage gap between the salary packages of directors and labourers. The gap can be as high as 300 times (including performance bonuses) that of labourers.

"But the gap is not the highest," said Seegers. The basic pay gap (excluding performance bonuses) is about 30 times more than that of labourers in South Africa, in Malawi it is 107 times more.

Despite executive remuneration doubling between 2006 and 2009 to an average of R4m a year for large-cap companies, Seegers said SA remained in line with global trends. During the same period, the average labourer's pay increased by up to 30%.

"Executives are remunerated for ensuring sustained capital growth and earnings for shareholders and for continued employment," said Seegers.

He acknowledged that the fortunes of executives do not always reflect performance. "There's a perception that directors get paid even if companies do not perform, or even instances where executives cannot legitimately claim responsibility for the (good) performance of the company."

In the latest annual executive pay study, Seegers urged remuneration committees of companies to consider shareholder and public perceptions, as well as economic conditions.

"They must be sensitive in deciding how to deal with underwater share grants as well as bonuses, particularly in sectors where the recession is still being felt – and especially in an economy where the lowest paid workers have annual salaries of around R42 000," said Seegers.

"This equates to a pay gap in the order of 250 to 300 times."

Referring to King III compliance, Seegers said a major focus areas for remuneration committees should be to re-evaluate the appropriateness of performance conditions and targets in respect of short- and long-term incentive plans. "They must also revisit levels of disclosure, and ensure they are prepared for greater shareholder consultation and AGM discussions."


  • Derek - 2010-09-08 14:36

    I guess this begs the question then whether labourers are paid too little in relation to their global peers?

  • gnplk - 2010-09-08 14:43

    I quote "Despite executive remuneration doubling between 2006 and 2009 to an average of R4m a year for large-cap companies, Seegers said SA remained in line with global trends. During the same period, the average labourer's pay increased by up to 30%" How can S.A. bosses then not receive fat cat salaries? What makes them so important that their salaries can double over a 3 year period but a worker only receives 30% pay increase over the same period? Isn't that considered unfare labour practice? I bet eishkoms bosses are at the top of the list.

  • Smanga Zulu - 2010-09-08 14:46

    I am a successful businessman.... Call me a fat cat! I don't really care...

  • Derek - 2010-09-08 14:46

    Pure greed - the scourge of the modern age.

  • leonard - 2010-09-08 14:48

    Please elaborate - is R4m his take home pay after tax? If not than the renumeration the exec gets is closer R2.5m as they are in line for 40% tax. He thus contributes roughly R1.5m of his salary to the benefit of the state.

  • Mike - 2010-09-08 14:57

    There is no ways our exectuives are overpaid. Look at what they get in the states etc. 4m is very modest for large cap CEO. Labourers are replaceable. A good CEO is not. I say that gap is still too narrow

  • alan - 2010-09-08 14:57

    It is all about supply and demand - basic economics - there is a huge supply of unskilled labour and a low demand - therefore the wages are low - until the gov realises how important job creation and education is you will have the same recurring problem!!!1

  • Mike - 2010-09-08 14:57

    There is no ways our exectuives are overpaid. Look at what they get in the states etc. 4m is very modest for large cap CEO. Labourers are replaceable. A good CEO is not. I say that gap is still too narrow

  • yvonne - 2010-09-08 15:03

    This is NONSENSE man! Stop comparing South Africa and the rest of Africa to Europe.!! We have only about 4 million maybe more taxpayers and millions unemployed! ONE CITY in europe has more Taxpayers than the whole of th8is blooming Country! and they are milking us dry! This is AFRICA NOT EUROPE!Off course they are getting TOO MUCH MONEY! If they want that MONEY relocate to EUROPE! Do not expect South Africans or Africans to have the spending power Europe has! The salaries these people are getting makes everything their Companies produce or do expensive! and ther Consumer pays more and in just ONE CITY in Europe USA Britain there are more taxpayers than in this whole bloody country!! and Continent if you take New York and Washington and London/Paris berlin etc. So STOP comparing RSA to Europe man! Get back to AFRICA this is where you live otherwise push off to Europe or whatever.People are starving here !

  • Fatcats time is near - 2010-09-08 15:06

    "Blessed are the meek, for they shall inherit the earth" (MATTHEW 5:5). This well known statement of our Lord is taken from the sermon on the mount; from the part some call "the beatitudes". The word "meek" means to be gentle, humble or considerate. It is the opposite of arrogance and violence. Those who are willing to share and sacrifice in behalf of others are meek. Those who seek for domination and will use any means to trample and crush others are the opposite of what the Lord refers to here. Meekness does not mean weakness! It does not mean one must cower or retreat from his principles. It does not involve the surrender of ones rights. Meek men and women of the Bible showed firm resolve, courage, conviction and strength. So must we. The phrase "inherit the earth" is a figure of speech which denotes the highest of blessings. These blessings are realized when the righteous enjoy the good things of life which the wicked often overlook in their pursuit of whatever. Also there is the peace, security and hope in Christ. And finally there is "the new heavens and a new earth" to be revealed at the end of time (II PETER 3:15). The meek truly shall "inherit the earth"!

  • nomboniso - 2010-09-08 15:09

    Doubling of executive salaries seemingly is as ggod as a 30% increase in the labourers salaries ? Unfortunately we never see the comparison between SOuth African general workers and their global peers. What I know from my travels is that a general worker in Europe lives a relatively ok life and in South Africa not. Let PWC ask this man to do a more comprehensive study instead of trying to show that the salaries of executives are not fat cat!

  • DW - 2010-09-08 15:13

    I do believe in fairness and common decency However; 1) Increased Legal and financial complience i.e. more responsibilty = more pay. And the lwas gets more and more! The labourers' responsibilty does not increase. 2)The paygap was incorrectly calculated - R4000000/42000 = 95.2 I do not know if it PWC or the writer of this article that cannot use a calculator?

  • Eric Martinsich - 2010-09-08 15:13

    Low South African executives pay low labourers pay. Pay executives and labourers in line with other countries and what would have changed

  • Stephen - 2010-09-08 15:14

    Good question Derek. What is a global peer for an executive? MTn only turns over Size of the market, capital employed, staff or USD 6.5 billion so they are not in the league of a USD 10 billion company. Eskom has a guaranteed monopoly therefore they do not have a global peer. PWC works for the large corporations and therefore are not really a credible objective third party. You can see this as they leave out performance related bonuses from the executive pay whilst Whitey Basson, bless him, only takes home R1.00 before performance bonuses.

  • Investor - 2010-09-08 15:21

    Now try this - How much are MP's paid in India, China and Brazil, where their economies are FAR outperforming SA ? You will find that SA Mp's are hopelessly overpaid by global standard compared to other poor countries, yet they do not deliver up to the standard of other countries. Plus most MP's in China have PHD degress while in SA they cannot even pass mlower grade maths or woodwork at grade 8 level....That is why SA cannot generate growth, jobs and services.

  • Lisaman - 2010-09-08 15:26

    How is the comparison made!! Is it made rand - dollar term or what money can actually buy!! Globally what is the diff business exec labourer salaries. In france min wage is about R9 000. Is that our min wage too!!! Compare apples with apples please!!!

  • WENDY - 2010-09-08 15:27

    Some fat cat interviewed on TV re teachers and nurses salaries said their earnings were on a par with other THIRD WORLD countrys. And now we read business executives earnings being compared to their GLOBAL peers! No wonder the average hardworking man feels so angry.

  • fikile - 2010-09-08 15:28

    Now really who are you trying to fool, Compared to global peers where Europe and America, Fat cats rule and labour is fooled. What a crap article

  • PETERE - 2010-09-08 15:29

    Everyone seems to forget that remuneration is an agreement between the two parties. One agrees to pay the other x for their services. If the pay is not competitive you can refuse and move elsewhere for a better package. When the employer cannot find a suitable replacement for that amount, they will have to revise their offer. Sadly good executives can sell their services all over the world and need to be compensated well enough to stay here. Labourers however are plentiful and largely unemployed. As a result they are in a weak position. If they turn down a low offer, another person will fill the gap believing anything is better than nothing. Only raising skills and reducing unemployment will solve this supply and demand problem. Once very few people are wanting labouring jobs, salaries for these duties will have to rise to attract workers, (as in other first world countries like the USA and UK.) Once there are plenty of competant execs flooding the market, companies won't need to pay so much to attract them and their packages WILL drop, (no company wants to pay more than it can get away with at ANY level!)

  • Luyanda - 2010-09-08 15:38

    dear sir you know what is happening you will find out 80% of job is done by me as clerk on verified and authorise by manager but the diference is more than 20.000.00 for what becouse i put all ma effort there for nothing. secondly found out during the financials we get back at our home late while we are not goin g to receive the same amount

  • ENGINEER - 2010-09-08 15:38

    I am an Engineer in Senior Management. In the past 6 months, I built a plant, employing 80 people during the project. This plant will employ a further 40 people directly and 40 indirectly for the next 30 years. I earn roughly 20 times the pay of the labourers. Our MD manages 2 more snr engineers, doing the same thing, for approx 40 times the labourers pay. We only get paid for plants delivered. I don't think we get paid too much, as taking us out of the equation, will kill the leverage generated by this. We only earn on the labourers building, but leave the lasting legacy of permanent jobs. Bear this in mind before criticizing levels of pay. This is called GROWTH. Rather focus on getting the lowest earners skilled, to allow them to earn more. Stats show that workers with matric already earn double of unschooled workers, this effectively halves the gap, but increases the leverage much much more!

  • Ada Milton - 2010-09-08 15:39

    When a CEO or any other executive team member leaves a company he is never missed no does the company suffer in any way. LIFE SIMPLY GOES ON.This is absoutely true for all companies except Apple or Virgin. What value do fats cats add? Answer zero. They are always replaced. They simply take money from a company without adding any significant value at all. The only beneficieries are the family members of the fat cat and ofcourse the fat cat themselves. This thievery has got to stop immediately without delay - its a new world - people are wise to scams by both educated gentlemen and highway robbers. Lets live in modern times.

  • BK - 2010-09-08 15:40

    Hahahaaa this is funny, when looking at the executive they are compared to overseas but when looking at workers then the rules change...

  • rick - 2010-09-08 15:41

    So called company bosses....I refer to CEO's appointed into companies they did not create...should be paid a salary inline with the rest of the employees. At the end of his/her tenure an analysis should be done on the exact value they brought to the company and a bonus awarded accordingly. at present , these people are not paid for a service, they are given gratuitious and obscene fortunes. Even Warren Buffet referred to the obscene money CEO's, EXECS, etc get.

  • Hilary - 2010-09-08 15:48

    Nobody, absolutely NOBODY is irreplaceable. The company certainly carries even after an any eco member leaves, what value is one or two people? Everyone else who is left behind goes on with business as usual. Please, no hero worship in business everyone is out to enrich themselves and the family. Yet, its the real workers on lower levels that keep the company going, people who have nowehere else to go that actually add value. Why should fat cats be paid exhorbitant amounts when they dont add anything to the books? They simply decrease profit through unneccesarily high salaries which they dont deserve. This is daylight robbery. Only wish they pay for it one way or another.

  • marc - 2010-09-08 15:56

    The only reason why management get paid so much is becuase they control the books. Like the greedy human beings that we all are - why would I not take money out of the till if I control it? Wake up people - these are not gods rather down to earth human animals - LAWS NEED TO BE PASSED TO STOP THIS NONSENSE and protect the future of majority of people on this planet.

  • Paul - 2010-09-08 16:09

    @Smanga Zulu: No, you're a successful BEEsinessman.

  • jesus - 2010-09-08 16:28

    For a third world country these CEOS and managers are overpaid.The companies they work for are also profiteering from collusion,anticompetive acts and price fixing inorder to prevent competition

  • deon - 2010-09-08 16:40

    How can you compare a South African CEO heading a mickey mouse company with CEOs of multinationals larger than most nation states in the world? Moreover, competition in SA is low, compared to developed countries. Our CEOs are overrated, and most of them would have been ordinary mid-level managers in Europe, US and Japan. They rely on a weak rand to justify their huge salaries without creating sustainable economic growth, giving policy makers a reason to question our jobless growth lately. Fears abouth anti-competition laws are now affecting our CEOs' strategies as well.

  • Its me - 2010-09-08 16:42

    You all miss the point.It's not what people earn, it's what they spend. We pay far to much for everything, we are taxed at every level, not PAYE but every other tax you can think of. South Africa has become a costly country to live in, period. When two or three companies control the entire food chain, when everything the Government owns does not work, and if it does they charge you an arm and a leg for using it.

  • John - 2010-09-08 16:47

    Please make the distinction between a parastatal, public company(ie shares on the stock exchange) and private company. In a private company the MD,CEO whatever does not nearly earn as much. Also it is all a matter of how skilled you are

  • John - 2010-09-08 16:50

    It is easy to get the same pay. Start your own companies - that way you can decide how much you take home. Employ people to do your work - what is the problem with you?

  • Trader - 2010-09-08 16:53

    Both are skewed!!!Take an executives pay and equate it to dividend yield and you will see they earn more than the shareholders.....the shareholders they can't excist without!!!

  • Stop The Lorry - 2010-09-08 16:55

    I have an honours degree and 12 years related experience in a crucial position; my TCOE to the company is about R 18 000 per month, including all benefits and bonuses. In the US in a comparable position I'd be earning at least USD 60 000 per annum. Strange that my company doesn't see it that way. Fat Cats make the rules, that's why there are two sets of rules! And then they all come together and pat each other mon the backs....

  • Anne_@Derek - 2010-09-08 17:02

    Compared to their global peers, they are way over paid and their productivity is only a fraction of that of their international peers.

  • Tumelo - 2010-09-08 17:15

    What about goverment ministers? Lets do a 'comparison with oversees peers'

  • Sean - 2010-09-08 21:19

    @PETERE, Who r u trying to fool? Exec’s, Government Director Level and UP decide themselves what their salaries are going to be and what bonuses they will be getting they give themselves Double % increases (R10K/m) for they don’t earn it, There are many execs roaming the streets of Europe and America “fall out of the financial crises that they have caused” and u tell me they are not a dime a dozen. Our execs have golden handshake clauses in there contracts that their buddies and they put in there. So getting rid of the over paid fat cats will cost the company R1M’s. I don’t read that any of them resigns and then goes for unemployment.

  • DarkMan - 2010-09-09 07:05

    If there Upper management's salaries and the MP/Minister's salaries are compared against their overseas counterparts, why aren't the normal "Man in the street"'s salaries also not compared?? Once you've checked that, the discrepancies will start to show!!

  • Steve - 2010-09-09 07:29

    Fin24 - please use some grey matter before printing such trash, quoting a ill conceived speech verbatim. Find out what planet you are living on, then of course wait for the Media Tribunal to sort you out

  • joe - 2010-09-09 07:29

    I know a young man who worked as a labourer on mines in SA, he worked in a group of 10 men. He returned to the uk and now earns almost 3 times more doing the same job, the difference, there are only 2 of them doing the job of 10 here. Management have responsibilities you couldnt imagine, they usually deserve every cent. In the private sector they are expected to do certain things or they are replaced, remember the higher you go the further you fall

  • BBB - 2010-09-09 07:57

    resentment..ha ha ha wait for the backlash WW2 was a walk in the park these fatcats are lving off the backs of those who do the work once again.Anyboy done the calculation lately of the cost of living for the less fortunate that is????

  • Bernie - 2010-09-09 08:20

    Some of the bosses' salaries are shocking - up to R28M per year. How could that ever be acceptable and justified in a 3rd world banana country like? this?

  • Irma - 2010-09-09 08:30

    The comparison being done is skewed, one of the reasons for some of the big companies collapsing world wide was because of overinflated salaries and big bonuses being paid out to the execs. When will SA learn to avoid the mistakes and not try to perpetuate it by stupid comparisons like this.

  • skilled worker - 2010-09-09 09:13

    These CEOs do get paid too much. More attention needs to be given for better salaries (and prospects) for skilled workers who bear the brunt of the tax burden. There needs to be more incentive for skilled workers (especially white) to stay in the country instead of emigrating.

  • @Derek - 2010-09-15 16:16

    Of course they are paid much less than their global peers, that's no secret. Basic labourers in developed economies earn very respectable salaries.

  • bomskok - 2010-09-20 10:29

    @Luyanda - the difference between you and your boss is that you do the work yes, but you go home and sleep a labourer's sleep, while your boss goes home and stress all night to ensure the business is still there tomorrow.

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