Fin24

MPs: Curb CEO salaries

2012-11-08 17:38

Parliament - The level of CEO remuneration in the private and public sector is sending out the wrong message to the average worker, Cope MP Nick Koornhof said on Thursday.

"We can't ignore what is happening in certain sectors which border on poor board decisions and greed," he told the National Assembly in a debate on high salaries in the private sector.

The Congress of the People MP said the huge gap between the rich and poor meant the country should condemn the exorbitant salaries paid to CEOs of private companies and state-owned enterprises.

Despite the economic downturn in 2008, CEOs were still able to double their earnings.

"In 2009, the average salary of a CEO was R4.8m... that is 36 times more than the average worker," he said.

Koornhof said this was setting a dangerous precedent and would affect the wage demands in various sectors.

"Let's tone down expectations, for the sake of the survival of this country."

ANC MP Gloria Borman welcomed the debate.

"Salaries are in fact quite obscene... the 15 highest paid directors of JSE-listed companies earned R622m last year," she said.

In comparison the top 15 earners of state-owned enterprises earned only R107m, less than R7m each on average.

The Democratic Alliance used the debate to reject various proposals including increasing Value Added Tax (VAT), placing a wage cap on high income earners and a super-tax for the rich.

"International experience indicates that luxury-goods focused VAT is too costly and complex to administer," said DA MP Wilmot James.

He said wage caps on high-income earners had failed in other countries who tried to implement this.

Instead, James suggested a list of DA proposals.

This included giving shareholders more say on the remuneration policy for executives.

"Shareholders must heighten their interest in and influence over remuneration by using critical performance information to exert pressure on corporate board remuneration policies and exit payments."

Comments
  • vaughan.lund - 2012-11-08 17:49

    Well atleast CEO's earn their keep as opposed to Zuma

      tim.gordon.5011516 - 2012-11-08 18:31

      Wealth production of CEOs is probably several thousand times that of bottom-end employees yet they earn only 36 times more? CEOs are getting cheated.

      denis.dendrinos - 2012-11-09 08:01

      Tax payers: Curb MP's salaries!

      gary.guy.507 - 2012-11-09 10:40

      I dont think curbing MP's salaries is the issues. But I think the amount of illicit state money the MP's are making through their families and friends fraudulent dealings will make the CEO's salaries look like peanuts!!

  • patrick.saunders123 - 2012-11-08 18:13

    private sector CEOs contribute to the economy. CEOs of parastatals are nothing more that seat warming political appointees with their snouts in the public trough.

      ike.jakson - 2012-11-09 06:26

      Koornhof a seat Warmer? His Dad warmed something else. Hahahehe

      hugh.robinson.56 - 2012-11-09 06:36

      An MP, Councillor or anyone working for government is supposed to do it for the nation and security not the high wages they are paid now. At least that was the reasoning not so long ago. We have a bunch of A holes that generate hot air, do less than a productive days work, get paid this huge salary then tell us that another deserves less. To a degree their complaint may have some truth because it raises a question of how much money is really required to make one satisfied that they have done a good days work for what they are paid? Has it got to the point where in the top of the business world your salary becomes a status symbol and not achievement? I know that in the lower strata it has reached the point that wages have outstripped production and demand to the point where we are being charged high prices for goods worth half of what we are charged. Just Maybe the ministers and anyone that complains should look inward first and ask, " Did I really earn my salary today"?

  • willem.louw.16 - 2012-11-08 18:20

    While we are on the topic of curbing salaries, I want to know if we will also be curbing ministers and members of parliment's salaries? A CEO salary is proportional to the company's turn over. The more success the company has, the more valuable the CEO and the higher his asking price. Now if only we ran the country on the basic principal....

  • koos.v.merwe.5 - 2012-11-08 18:24

    Yes I suppose capping CEO salaries will send the right message, such as: "We don't want good CEO's in our companies, just cheap ones" or "We don't need the tax money" Idiots. Why don't they raise taxes for salaries above R20m AND use the tax money sensibly. That's probably just too much to ask.

  • anthony.richardson.961 - 2012-11-08 18:40

    Unforunately or fortunately, whichever way you look at it, SA does not function in a vacuum. We are part of the global market place and human capital will go to the highest bidder.\r\n\r\nCap public sector salaries and the good ones will move to the private sector (not going to lose any sleep over that one!). Try and cap private sector salaries and we will lose them overseas.\r\n\r\nInequality in society is a global phenonemo but maybe we are more skewed than most. So, instead of casting disparity on the rich and successful focus on giving the poor a chance by providing decent education, not a welfare system that enourages dependancy

      william.hall.12979 - 2012-11-09 01:06

      Agreed! Try and cap private companies salaries and they will find diffent ways to distribute profit rewards to successful boards. Special share classes, bonus dividend awards, preference shares, complex commission structures, potentially with offshore companies and trusts etting involved, etc. Are you also going to cap the amount that one Politician may steal per year? Learn from other countries' mistakes! unfair legislation that makes law abiding citizens into criminals will not help the cause.

  • peter.hall.3956 - 2012-11-08 18:51

    Sounds a little bit like communism to me, control the private sector!!

      carryn.whittaker - 2012-11-08 21:54

      Kagiso executive pay in the US is the highest in the world. So no they are not commies... And there is no hard cap or limit on the monetary pay a Ceo can receive in the states. If there was there would be a brain drain as they would move to nations that have less restrictive rules. Much the same as I expect would happen here.

      ike.jakson - 2012-11-09 06:28

      Have you been to the USA, Kagiso, wearing blindfolds and ear plugs?

      willy.josephs - 2012-11-11 15:02

      Kagiso.booi you are right about what Obama did and said afterwards,however you also mentioned an interesting fact that \after they bailed them out\ that means the government bought that influence with taxpayers' money therefore the companies are partly owned by the state now so they can dictate to them how to remunerate their CEOs. Also it makes sense that he said THOSE struggling companies will have to have a salary cap for their CEOs which I agree with but its not that simple to just tell a private business owner who employs someone to run his business how much he should remunerate that person,let's please be realistic here and think about it a lot harder than we do right now. Another thing we should be worried about the salaries our MPs,municipal managers,DGs and Cabinet are getting and try to bring it down a bit because that one is public money! Premiers included!

  • roland.kroon.5 - 2012-11-08 18:54

    Dont know too many Ceo that have taken R200m of their company's money to build a house !!!!!

  • peter.hall.3956 - 2012-11-08 19:10

    CEO's salaries are a drop in the ocean compared to governments MASSIVE squandering of money.

  • Anthony C. Onwudiegwu - 2012-11-08 19:12

    Discussin CEO'S salaries should be done recognising privare and politician ceo's.\r\n\r\nAn individual who startesd and run his business can not be dictated to as to how much to earn.

  • rjdkolb - 2012-11-08 19:33

    What a wally. SA MPs earn close to 900k a year. President Jacob Zuma’s annual salary is now R2 622 561. British Prime Minister David Cameron takes home only R1 843 884 annually. A South African minister earns R2 006 292, a British minister gets R1 747 340 and a French one R1.2 million per year.

  • kabelo.leeka - 2012-11-08 19:56

    Cut the government MP salaries!

      joe.smit.549 - 2012-11-08 20:22

      Better still, cut there jobs!

      joe.smit.549 - 2012-11-08 20:23

      Better still, cut their jobs!

  • maverick.generators - 2012-11-08 20:02

    I'd love to know how our president can afford to pay R20m of the R200m Nkandla renovations on his R2m/year salary.

  • henk.tredoux.7 - 2012-11-08 20:04

    In all your wisdom Mr Koornhof, what signal do parastatals like SAA, etc and government departments send out?

  • mduduzi.nkosi.733 - 2012-11-08 20:19

    I suggest that African people should stop partake in this media is an European thing many of our comments are not displayed here

      george.larkins.14 - 2012-11-08 23:17

      Ag shame mdudzi,is it again the whites fault.Maybe you should learn how to operate a computer.That is why certain people earn better salaries,THEY HAVE THE QUALIFICATIONS,ARE HARD WORKING,YOU CAN TRUST THEM,THEY WONT BURN PROPERTY AND THEY ARE PRODUCTIVE.

  • sefako.mokgalaka - 2012-11-09 04:56

    1) CEO's salaries should be structured in terms of profits of the companies and the salaries of the all the employees. After all the CEOs cannot achieve any results without the contribution of the hardworking employees.\r\n2) MPs, Premiers, MEC and SOEs: Cut down on unnecessary expenditure like R1m cars (the job can be done with less expensive cars), employ competent staff not comrades and relatives. Pay performance based bonuses. No performance no bonus. Finally fire unhelpful and lazy public servants who are not willing to serve the people.

  • ike.jakson - 2012-11-09 06:32

    jULIUS mALEMA WON'T APPROVE OF THIS ARTICLE. HE IS DRAWING AS MUCH AS zUMAHA.

  • Tallica7 - 2012-11-09 06:33

    Let's not forget how much any MP gets in perks... Private jets, access to all BEE deals, spousal support, blue light brigade etc etc etc at the end of the day at least CEO's are held accountable to some degree for their performance, can't say that about government now can you! JZ as per DA stats was reaping a R110m a year in perks add to that the nkandla compound homestead or as JZ calls it Zumaville of R230m and CEO'S are grossly underpaid on purely accountability!

  • sisie.indola - 2012-11-09 07:30

    "15 CEO earners of state-owned enterprises earned only R107m, less than R7m each on average."that is not taking into account how much they fleeced - so i would get off the high horse. Since when do you become a public servant to become a multimillionaire or billionaire - in the old days these public servants were the worst paid earners in the nation - because most of them had no matric (like now) but they had a job (i am talking postal workers, maintenance workers, rubbish collectors)the public servants in office had a bit of education, some more than others, but their job was the running of the country and not the running of their own bank accounts, and their own businesses because it was convenient to do business with those very people in government that had the inside handle on what is going down, what is coming up and how to manipulate the system for their own benefit. They were there for the people - and that is the difference. So how many of these so called CEO's of public enterprises has had bonuses and increases just because, not because they have done a great job.

  • quarty.vanzyl - 2012-11-09 08:09

    first curb the salaries of the useless MP,s, then have a look at the salaries of CEO,s

  • pieter.pretorius.106 - 2012-11-09 08:23

    They must also curb the salary of government and municipality managers. The money managers at municipalities earn are hair raising. Will be good if the curb those salaries as well at least we can then safe on taxes.

  • gerrit.vanpletzen - 2012-11-09 08:49

    Curb MP's salries!

  • flysouth - 2012-11-09 09:38

    I tend to feel that there is a case for lower salaries - some execs are paid way too much. And industry would do itself a great favour if it collectively would decide to make such reductions, even for a period of a few years, as a gesture of goodwill. Having said that, this is an enormously complex question, given that these rewards are paid, not from taxpayer's or public money but from private profits and as such government has no say over what is paid by private companies and should not control that. One must however question how these massive salaries are able to be paid. During recessionary times it can only be a result of unwarranted price increases and I believe this to be true almost across the board. But without very high rewards why would a talented exec. remain here in SA when he can work overseas without restrictions on salary? So what Cope is suggesting is actually social engineering and the inevitable result will be to chase away ability and talent which is needed here. In other words, what Cope (ANC-lite) is suggesting for the private sector, is what the ANC has already done in the public sector - to remove those with ability in favour of the remaining dross which has little or no ability! We can see the result of such a policy all around us!

  • TshilidziPhuravhathu - 2012-11-09 09:47

    Sounds to me like the pot is calling the kettle black...

  • mapudieric.morakiwamachacha - 2012-11-11 14:58

    Also curb that of president, ministers and their deputies, MECs, mayors and other polical heads of the state institutions. They earn a lot for a little work they claim to do while they in fact do nothing except playing solitaire in their well-furnished and air-conditioned offices, driving expensive cars and enjoying celebrity life style.

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