Executive pay has doubled over the last six or seven years
This is according to Deloitte's new annual Executive Compensation Report, which shows what top executives earn in SA.
Executive pay continues to attract intense media scrutiny both locally and abroad. Much of the focus this year in the debate has been on the growing inequality between those at the top of the organisation and the general workforce. The 2018 report looked at over 250 JSE-listed companies, which stretched from top-tier (high market cap) groups to mid-tier and low-tier companies.
It analyses the remuneration disclosures of executives from JSE-listed companies over the past seven years and paints a picture of how executive pay has shifted over the years, and a possible way forward. Among the findings of the report are that, while the trends in shareholder value and company performance have been largely dictated by economic and market conditions, this has not been the case in executive pay, which has been resilient over time and has essentially doubled over the six/seven year period. In fact, executives almost always receive performance bonuses, which are typically between 1x and 3x the base salary. Also, the increase in executive pay over the six year period has still outstripped inflation, although it is trending towards being more aligned with inflation.
Furthermore, the report shows that large, multinational companies pay the most – but the assessment of 250-plus companies listed on the JSE shows that pay isn’t necessarily linked to company size or sector. Nevertheless, the report shows that remuneration committees are applying more scrutiny to pay increases as shareholders are getting more involved with executive pay, resulting in remuneration reports becoming more detailed and transparent.
The high level of executive pay has come under fire in businesses across the world, but the impact has been highlighted in countries like South Africa, which has been labelled as the most unequal country in the world.