Ryk van Niekerk
5 minute read
18 Feb 2016
11:55 am

(Most) SA executive directors not overpaid

Ryk van Niekerk

Pay gap ratio research shows remuneration packages compare favourably with international benchmarks.

Picture: Thinkstock

Moneyweb is publishing the first update of our new Executive remuneration tool, which now includes detailed information about long-term incentives that executive directors of JSE-listed companies received in their last financial year, in addition to their other forms of remuneration.

The research is aimed at providing a ballpark comparison of the pay gaps that exist between the remuneration of South Africa’s leading companies and their rank and file employees.

The research was conducted by Moneyweb and Profile Media and includes detailed analyses of the annual reports of 329 listed companies and nearly 734 executive directors.

These packages are then compared with the average salaries of employees in the respective sectors as indicated by Statistics SA’s Quarterly Employment Survey (QES) for the second quarter of 2015.

(Read here for the full methodology of the research.)

Remuneration levels compare favourably with international trends

The latest research found that the average difference in guaranteed annual remuneration between executive directors and their rank and file employees is around 21 times. If a discretionary short-term incentive or bonus is added to the guaranteed package, the ratio jumps to 36 times.

These ratios compare favourably with international trends, where ratios of around 50 times are seen as being acceptable. Although the averages of all executive directors are well below this benchmark, the average ratios of the most senior executives (CEOs, executive chairpersons and chief executives) are closer to the 50 times-ballpark. Their guaranteed salaries’ ratio is 35 times, but if their short-term bonuses are included, the ratio edges up to 47 times.

In fact, executives of JSE-listed companies earn relatively modest salaries compared with the US and the UK.

Research conducted by the Economic Policy Institute found that pay gap ratios in the US rose significantly in the past few decades. According to the research, the CEO-to-worker compensation ratio was 20 times in 1965. It rose to 30 times in 1978 and to 123 times in 1995. It peaked at 383 times in 2000, and was at 296 times in 2013.

The research think tank High Pay Centre also found that the CEOs of FTSE 100 companies earn around 150 times the salary of their average worker.

Although South Africa is one of the most unequal societies in the world, the inequality flows predominantly from the high level of employment. According to the QES, the average salary in South Africa’s formal sector is R206 499. If compared with the average salary of a rand-remunerated executive director of a JSE-listed company, the pay gap ratio is 17 times if short-term incentives are excluded, and 27 if they are included.

Long-term incentives

The most significant improvement to the latest research is the inclusion of long-term incentives in the data. This deferred income is not included in the calculation of the pay gap ratios, but is listed to show the extent of additional rewards executive directors earn on top of their normal guaranteed salary, benefits and their short-term incentives.

It is important to note that only 216 of the 734 surveyed directors received long-term incentives. The average long-term incentive for those directors who received such a benefit is around R6.4 million.

Rand-remunerated executives earn less

A clear trend is that rand-remunerated directors earn a lot less than their (JSE-listed) counterparts paid in foreign currency. These executives are typically at the helm of large multinational companies such as BHP Billiton, SABMiller, Sasol, British American Tabacco, Anglo American and Investec and manage businesses with operations all over the world.

The average guaranteed salary for rand-paid executives is R3.4 million – which is less than half the R7.8 million their international peers pocket. The rand-remunerated directors received short-term bonuses of around R2.2 million, while their international colleagues earned about R8.3 million – an even more significant difference.

In total, locally-remunerated executives’ total packages are about a third of those paid in hard currency.

This trend is also visible with long-term incentives, although the average long-term incentive amounts to R6.4 million, as shown in the table. Those paid in rands average R4.3 million while those earning in pounds, dollars and euros averaged long-term incentives of a whopping R20.5 million.

It is also important to note that the pay gap ratios for executives remunerated in hard currencies are calculated on average salaries of rand-remunerated employees. Ideally, these ratios should be calculated based on the actual average salary of all the companies’ employees.

Amounts and ratios averages of all directors


Guaranteed package Short-term incentive Long-term incentive Total annual based reward Ratio cum bonus Ratio ex bonus
Average R3 998 996 R2 994 010 R1 964 593 R6 993 006 36 21
ZAR remunerated R3 441 163 R2 220 210 R1 258 186 R5 661 372 31 19
Non-ZAR remunerated R7 802 941 R8 270 673 R6 392 358 R16 073 614 71 35
CEOs, CE and executive chairmen R5 319 078 R3 645 221 R2 633 907 R8 964 299 47 29
CFOs and FDs R3 250 747 R2 104 364 R1 258 827 R5 355 111 27 17
Other executive directors R3 154 286 R3 049 320 R1 827 957 R6 203 606 32 17

Not all directors received short- and/or long-term incentives.


This research was prompted by the US Securities and Exchange Commission’s (SEC’s) introduction of a new pay gap ratio rule last year, which will compel US companies to disclose such pay gap ratios from next year. This debate is probably much more contentious in South Africa and this rule may quickly find its way into the listing requirements of the JSE.

This research aims to provide an indication of what pay gap ratios South Africans can expect to see when these rules are introduced in the local market.

Click here to use the executive remuneration search tool.

The JSE’s Top 15 earning executive directors are:

 Company  Name Role  Annual
Investec Ltd. Hendrik du Toit Exec dir R86,302,050
Investec Ltd. Stephen Koseff CEO R71,213,860
Investec Ltd. Bernard Kantor MD R71,213,860
Investec plc Ian R Kantor Exec dir R71,209,020
Anglo American plc Mark Cutifani CEO R66,926,330
Investec Ltd. Glynn Robert Burger FD R64,099,950
British American Tobacco plc Nicandro Durante CE R59,721,640
Shoprite Holdings Ltd. J Welwood Basson CEO R50,092,000
SABMiller plc Alan Clark CEO & COO R47,176,940
Sasol Ltd. D Constable CEO R47,011,000
British American Tobacco plc Ben Stevens FD R46,551,980
Mondi Ltd. David A Hathorn CEO R44,878,160
BHP Billiton Plc Andrew Mackenzie CEO R41,802,000
Discovery Ltd. Neville S Koopowitz Exec dir R40,975,000
Datatec Ltd. Jens P Montanana CEO R37,272,930
Anglo American plc Rene Medori FD R36,778,040

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