New research by finance publication, Moneyweb, shows that executives in South Africa are not overpaid – at least not by international standards.
The group’s Executive Remuneration Tool looks at the basic and total salaries of over 730 executive directors from 329 listed companies on the Johannesburg Stock Exchange, compared to the average salaries of employees in their respective sectors.
All data was sourced from annual reports, and Statistics SA’s Quarterly Employment Survey for the second quarter of 2015.
The data found that executive directors in South Africa earn, on average, basic salaries which are 21 times higher than the average employee. This jumps to 36 times higher when bonuses are added.
These ratios are favourable when compared to international trends – where a salary 50 times higher than the average employee is acceptable.
Moneyweb noted that when senior executives are taken into consideration – CEOs, executive chairs and other chief executives – the ratio jumps to 35 times on basic salary terms, and 47 times with bonuses included. This is closer to the international ‘limit’.
- The average executive in South Africa earns a basic salary of R4 million, jumping to R7 million with short and long-term incentives included.
- Chief executives earn an average basic salary of R5.3 million, jumping to R9 million with incentives included.
Unsurprisingly, executive directors who earn in local currency were paid less, overall, with an average of R3.4 million (R5.7 million including incentives), versus those earning in other currencies, which averaged a basic salary of R7.8 million (R16 million with incentives).
It must be noted that only 216 of the 734 surveyed directors received long-term incentives, Moneyweb said.
- You can see a full breakdown of the data here.
Previous research compiled by Mergence Investment Managers in 2014 found that South Africa had one of the biggest wage gaps in the world – ranked 5th after the USA (1st), Hong Kong (2nd), Germany (3rd) and the UK (4th).
Where Mergence’s and Moneyweb’s research differs is that CEO salaries and bonuses were compared to the average employee salary in each respective company, rather than by sector.
The investment group found that the average JSE-listed CEO was earning 140 times more than their average employee, shooting as high as 725 times in the most extreme cases.