Finance

CEO vs employee salaries at South Africa’s 25 biggest companies

Staff Writer

 ·6 Aug 2017

South African CEOs are known to be some of the highest paid in the world, with the country having the reputation of having one of the biggest pay disparities between executives and employees.

Jobs data by StatsSA for 2016 showed that average monthly earnings paid to employees in the formal non-agricultural sector was at R17,517 per month – translating to R210,200 annually.

Meanwhile two reports on executive pay from Deloitte and PwC showed that the average executive in South Africa earns R17.972 million a year in total compensation, while CEO averages can average as high as R24.6 million.

BusinessTech has delved into the financial reports of the country’s 25 biggest JSE-listed groups to ascertain how much more CEOs get paid than their average employee.

The data in the tables below come with several caveats: firstly, many of these companies are dual-listed and cover all operations, including those outside South Africa – therefore averages will be skewed higher due to the weak rand and conversion rates.

Secondly, the average is based on a simple calculation: the total a company spends on salaries, divided among the total number of employees.

This is not a true reflection of how specific employees are remunerated; the figures will be skewed by management, who receive much higher salaries than general workers, and various other salary bands – however, they do provide a basis through which pay disparity can be measured.

For a more detailed look at salaries in South Africa, read South African salaries in 2017: what people earn

Average Salaries

Recent have raised debate around the levels of executive pay in South Africa, particularly when contrasted with employee pay.

According to Deloitte and PwC, shareholders are starting to take note, and how much CEOs and other executives get paid is coming under closer scrutiny, balanced by questions of whether or not their, and the company’s performance warrants it.

Pay Gaps

Among the 25 biggest companies listed on the JSE, the groups employ a combined 1.3 million people, spread across all operations, all over the world. Total spend on salaries amounts to R570 billion – of which R1.4 billion is paid out to the CEOs.

The average employee salary amounts to R589,850, and the average CEO salary is R55.3 million – almost 95 times more.

In many cases there are startlingly large gaps between CEO pay and employee pay – one of the key reasons behind this is the way executives are remunerated, which often include both short-term and long-term incentive schemes (STI and LTI), which mature and lead to massive payouts.

One example is the pay of Shoprite CEO Whitey Basson in 2016, where his LTI effectively doubled his salary. However, even without this massive payday, the Shoprite CEO to average salary gap would still be the highest on the list.

The table below shows how large these gaps are among South Africa’s 25 biggest listed companies.

Data sourced for this article comes directly from the 2016 and 2017 full year reports for the 25 biggest companies listed on the JSE. All currencies were converted to rands. * indicates salary paid in foreign currency.

Read: Do South Africa’s top CEOs deserve their high salaries?