R38,9m -- that's South Africa's top salary
Banking boss Jacko Maree of Standard Bank was the country’s highest paid chief executive last year with total earnings of R38,9-million.
Human capital management company Mabili says in its annual report on directors’ remuneration that banking bosses earn top dollar, the financial sector proving to be lucrative for both executive and non-executive directors. The average bank boss earns R8,4-million. “The banking sub-sector is seen to pay consistently high packages, with all positions earning a premium over the sector average.”
Mabili says that “staggeringly high executive and CEO packages in telecommunications are justified by high profitability levels; however, it has led to the argument that these companies are exploiting their -customers.
“The average package for telecommunications CEOs amounts to R12,5-million—a remarkable figure.”
Mabili analysed the remuneration packages of 201 JSE-listed companies with revenues exceeding R100-million for the year ended 2004.
It finds that, while top company executives earn 139 times more than the average minimum wage, South African executive pay is comparable internationally.
“While there has been a great deal of attention focused on senior executives in South Africa, local executive packages are well within international norms,” says John Shaw, Mabili CEO.
But Mabili says the wage gap between highest and lowest paid employees is of concern as it indicates a “disproportionate share of the wealth”.
The average chief executive package was R4,3-million last year while the average minimum wage for the year was R34 500.
Maree’s earnings include remuneration of R3,5-million, a bonus of R9-million and share options of R25-million.
BHP Billiton is the most expensive board in the Mabili survey. Its eight executive directors share R160—-million. Anglo American, by comparison, paid R49-million to its four executive -directors.
SABMiller chief executive Graham Mackay is a big earner with a package of R19,4-million.
Information technology may still be a victim of the dotcom correction, but, says Mabili, “despite the impact the sector is having on the global economy, the financial performance of many IT companies has been poor and directors’ remuneration has been relatively low”.
Dimension Data executive chairperson Jeremy Ord took home R9,6—million and chief executive Brett Dawson R4,5-million. Average CEO pay for the sector is R2,8-million.
Mabili says that performance-based remuneration is becoming the most important remuneration strategy. “Shareholders find it hard to -dispute large packages where executives are clearly adding value and contributing to the long-term interests of the company. We are seeing an increase in performance-based pay.”
With The New York Times noting that stock options made up 31% of CEO pay in the United States during 2004, down from 69% in 2001, Mabili says that share options exercised made up only 11,26% of CEO’s total packages last year.