CEO pay vs performance in South Africa

Globally, CEO pay is a hotly contested issue, especially in markets such as South Africa, where inequality and pay disparity is extremely high.

Research has shown that South Africa has one of the largest pay gaps in the world – 5th highest – where CEOs earn, on average, 170 times more than their employees.

The Wall Street Journal recently revealed how US companies reward their chief executives handsomely, despite disappointing returns to shareholders.

Read: South Africa’s massive wage gap

Investor returns defined

Total shareholder return is an annualised percentage that is calculated by adding the appreciation in the share price and the total dividends paid to the shareholders.

Crunching numbers among South Africa’s biggest JSE-listed companies, it’s clear that the blue-chip firms deliver healthy returns for shareholders.

Only two companies among the JSE’s top 20 showed a decline in share value over the past financial year, although dividends were still paid to shareholders in both cases.

For the listing below, only companies that report financials in the local currency (with a majority listing in South Africa) are presented; thus multinationals such as BAT, BHP Billiton and SAB Miller were excluded.

The only exception to this is luxury goods company, Richemont, which is led and chaired by South Africa’s richest man, Johann Rupert.

Company Share price open Share price close Dividend Investor return (%)
Telkom R33.65 R79.20 R2.45 143%
Naspers R1 155.00 R1 773.56 R4.25 54%
Sasol R431.54 R632.63 R21.50 52%
FirstRand R28.93 R40.75 R1.74 47%
Barclays Africa R132.25 R182.00 R9.25 45%
Sanlam R53.24 R70.00 R2.25 36%
Aspen R227.07 R298.89 R1.57 32%
Remgro R189.95 R230.00 R2.33 22%
Nedbank R208.07 R243.00 R10.28 22%
Bidvest R244.95 R282.58 R4.32 17%
Standard Bank R128.59 R143.48 R5.98 16%
Richemont R100.05 R99.42 R13.69 13%
Old Mutual R32.99 R34.72 R1.67 10%
MTN R217.02 R221.41 R12.45 8%
Vodacom R129.99 R132.69 R7.75 8%
Anglo American R261.95 R224.29 R6.49 -12%
Shoprite R185.50 R154.00 R3.50 -15%

CEO Pay vs Investor return

The following graph plots the SA companies’ CEO salaries and percent returned to investors in their respective latest financial years.

Notably, Naspers has not yet published how much current CEO, Bob van Dijk was paid in the most recent financial year; however, the group has historically not paid CEO, Koos Bekker, a salary, instead opting to compensate the executive with shares in the company.

Salaries vs Investor return
Salaries vs Investor return (click to enlarge)
Company CEO Salary Investor return (%) Market Cap
Telkom Sipho Maseko R11.7 million 143% R31.4 billion
Naspers Bob van Dijk TBA 54% R795.7 billion
Sasol David Constable R52.0 million 52% R287.1 billion
FirstRand Sizwe Nxasana R29.5 million 47% R298.0 billion
Barclays Africa Maria Ramos R28.6 million 45% R151.9 billion
Sanlam Johan van Zyl R5.3 million 36% R144.1 billion
Aspen Stephen Saad R15.3 million 32% R163.9 billion
Remgro Jannie Durand R9.0 million 22% R131.5 billion
Nedbank Mike Brown R35.1 million 22% R119.1 billion
Bidvest Brian Joffe R28.0 million 17% R102.9 billion
Standard Bank Ben Kruger, Sim Tshabalala R21.7 million* 16% R257.3 billion
Richemont Johann Rupert R53.8 million 13% R580.5 billion
Old Mutal Julian Roberts R81.0 million 10% R192.9 billion
MTN Sifiso Dabengwa R28.1 million 8% R420.5 billion
Vodacom Shameel Joosub R20.8 million 8% R205.9 billion
Anglo American Mark Cutifani R71.7 million -12% R253.3 billion
Shoprite Whitey Basson R50.0 million -15% R99.0 billion

*Averaged

Among the South African telecom operators, Telkom flew past both MTN and Vodacom – and indeed all the other top 20 companies – providing the biggest return to investors.

Telkom was included in the findings in light of its recent return to dividend payouts, as well as its largely successful turnaround strategy.

In its latest annual results, the group reinstated a dividend of 215 cents per share and a special dividend of 30 cents per share for the 2015 financial year – the first time since 2011.

Total Shareholder Return
Total Shareholder Return in telecoms

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CEO pay vs performance in South Africa