Executive pay has more than doubled over the last eight years

Here are three interesting findings from Deloitte's latest executive remuneration report.

Over the last eight years, executive pay has more than doubled and there have been very few instances where the CEOs or CFOs among the top 250 JSE-listed companies have not earned a bonus. This is among the many findings of the fourth Deloitte Executive Compensation Report, which analyses eight years’ worth of guaranteed pay, performance variable pay and total annual pay and its growth over the last eight years with a full examination of its relationship to company size and sectoral orientation. 

The impact of the Covid-19 pandemic has put a sharp focus on the executive remuneration debate, which has been attracting intense media scrutiny both locally and abroad. 

Reads the report: The disparity in levels of executive pay in relation to those of the lower-paid workers is a societal concern worldwide. This disparity is exacerbated in South Africa, with its additional transformational needs and high levels of unemployment. In a post
Covid-19 environment, the societal issues will likely have a significant impact on the direction of executive pay.”

Here are five interesting findings from the Deloitte report:

1 Smaller companies pay more. Contrary to popular belief, the Deloitte report finds that many smaller companies are paying as much as, and often far more than much larger companies.

2 Pay has more than doubled. The report finds that the growth in annual pay, which combines total guaranteed pay (base salary plus allowances & company medical and/or retirement funding with total annual compensation (total guaranteed pay plus cash bonus) has exceeded that of both financial performance and shareholder value. 

3 Mostly variable pay. In the larger companies, the report states that the pay mix for the top positions tends to see one-third of remuneration occurring as fixed pay, while two-thirds accounting for variable pay when targets a met. When maximum performance is achieved the split tends to be as much as one-quarter being fixed pay and three-quarters being variable pay. 

“Generally, performance variable pay appears to be performance contingent pay, accruing under most circumstances other than the worst case of underperformance. This approach contrasts with performance-driven pay resulting from out-performance against targets set
or in comparison to peer groups.”