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 (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 in telecoms
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