Business

Here’s how much money the average chairman in South Africa gets paid

Staff Writer

 ·12 Nov 2019

New pay data from the Institute of Directors in South Africa shows the average pay of a non-executive director at a listed company in South Africa, including the chairman.

Non-executive directors (NEDs) are responsible for making critical strategic decisions and for overseeing the management of a company without the benefit of observing the business on a full-time basis, notes the IoD, which assessed 178 JSE listed companies, including those listed on AltX.

They also carry significant potential risk and liability. “This requires particular skills, knowledge, experience and business judgement, for which they need to be fairly remunerated,” it said.

However, determining fair remuneration is complicated due to the following:

• Non-executive directors’ contributions are made in a number of different ways, requiring different time commitments;
• There is no consistency on the prescribed number and duration of standing meetings per annum; and
• There is no uniform method of remunerating NEDs.

For purposes of the research, the JSE listed companies were divided into three size categories based on market capitalisation as at 11 June 2019.

JSE AltX companies are displayed separately to represent small to medium companies (SMEs).

The research was conducted on the basis of the most recent AGM notices and/or year end reports, ranging over the last 2018/2019 year end period.

From the 178 companies reviewed, the following types of fee structures where used to remunerate NEDS:

The majority of companies prefer to pay an annual retainer. Notwithstanding the fee structure used, the majority of companies paid additional fees for travel and other disbursements as well as ad hoc meetings fees on a daily or hourly basis, where relevant, the institute said.

The IoD’s data showed that the average chairman of a large listed company earns around 3.1 million a year, with the highest paid chair paid as much as R16.1 million. For a chair at a medium sized company on the JSE, that number drops to R845,254, and R415,019 for a small company. The average pay for a chairman on the AltX, dropped to R363,243

The IoD noted that a majority of the companies pay an ad hoc hourly or daily rate for NED participation in extraordinary meetings or additional meetings above the annual requirement.

Large

Medium

Small

AltX

Read: How much non-executive directors and company chairs get paid in South Africa