If there’s a five-letter expletive in Cape Town these days, it’s Eskom.
With just one exception, Eskom’s executive directors, who earned R73-million last year, are the highest paid in the country.
The city has racked up losses of hundreds of millions of rands in power cuts and load shedding and faces a bleak winter as the country runs out of electricity capacity. There are even suggestions the country’s targeted 6% economic growth is imperilled through mismanagement by the primary protagonist, the power utility, or its shareholder, the government.
Eskom’s senior management has excelled in one area, though — paying itself extravagant salaries.
Eskom’s nearest peer equivalent, Transnet, paid its executive team a relatively modest R28,9-million during its last annual reporting period.
Eskom chief executive Thulani Gcabashe earned R13-million last year, five times more than Transnet chief executive Maria Ramos’s R2,6-million.
The two parastatals are similarly sized, at least in terms of revenue, their respective sales being R46-billion for Transnet and R42-billion for Eskom.
Gcabashe’s take-home pay likewise dwarfs that of Tito Mboweni, who is paid R2,3-million annually to run another state-owned institution, the South African Reserve Bank.
Not far behind Gcabashe are eight divisional managing directors who took home between R5,7-million and R9,2-million last year.
The eight, according to Eskom’s annual report, are EN Matya (generation), PJ Maroga (transmission), SJ Lennon (resources and strategy), ME Letlape (human resources), PD Mbonyana (corporate), JA Dladla (key sales and customer service), MM Ntsokolo (distribution) and TJ Matsua (external relations).
Letlape was paid R6,3-million to head up human resources, Matsua R9,2-million as the head of external affairs, meaning they earn about twice and three times more than Ramos and Mboweni, though they run service functions.
Eskom has two other executives, BA Dames (enterprises) and B Nqwababa (finance), neither of whom had completed a full year when it last reported its annual financials.
The R6,9-million average for the eight divisional executives is extremely generous when compared to high-profile chief executives in the private sector such as Harmony’s Bernard Swanepoel (R2,1-million), Mittal’s Davinder Chugh (R2,6-million), Kumba’s Con Fauconnier (R4,5-million), Caxton’s Terry Moolman (R1,98-million), Imperial’s Bill Lynch (R4,2-million), Angloplats’s Ralph Havenstein (R5,3-million), Discovery’s Adrian Gore (R2,3-million) and Sasol’s Pieter Cox (R5-million).
Eskom’s R73-million payments to its executives include R17-million in restraint-of-trade agreements.
These are reportedly to keep key personnel from defecting to the proposed regional electricity distributors (REDs), the mooted local power operators, which, with the ironic exception of Cape Town, are yet to set up shop.
While some of the skills required to run Eskom are in no doubt in short supply, restraint payments have been made to individuals responsible for human resources (R2-million), external relations (R2-million) and marketing (R2,1-million). The market is not short of senior black skills in these three areas.
Bonus payments of R7-million were also made in terms of the Eskom Performance Index, which the annual report says measures performance relative to international utility companies, including factors such as its shareholder compact, macroeconomic indicators and the performance of a basket of selected South African companies.
This R73-million in executive payments is for a 15-month period, the 12-month pro rata figure being R58-million.
These earnings are higher than those paid by top South African corporations. According to Mabili’s Directors’ Remuneration Report 2005, these are: Sasol (R15-million), Pick ‘n Pay (R19-million), Mittal (R23-million), Absa (R24-million), Old Mutual (R26-million), SABMiller (R30-million), FirstRand (R36-million), Sappi (R37-million), Barloworld (R45-million), Telkom (R46-million) and Anglo American (R49-million). Only Standard Bank (R63-million) paid its executive directors more.
Eskom spokes-person Fani Zulu referred inquiries to Eskom’s annual report. It says Eskom’s remuneration philosophy is based on the belief that the appropriate remuneration for management should be linked to the retention of skilled leaders and the performance of the organisation.
“It is essential to retain key individuals over the longer term. Remuneration is determined with regard to performance and market factors and consideration is given to short- and long-term incentives as well as basic salary.
“International and local benchmarks are evaluated to align all packages to companies of similar size to Eskom. It is Eskom’s intent to remunerate in the median of the market, with the objective of recruiting and retaining the best management team to lead the business.”