Chief executive vs employee pay at South Africa’s 25 biggest companies

A new report published by UK think tanks, Chartered Institute of Personnel and Development and the High Pay Centre, has revealed that the average CEO among the top 100 companies listed on the London Stock Exchange takes home a salary of £3.93 million (R73 million) per year.

This represents a massive 11% increase in salaries at a time when the UK government is trying to rein in high pay among executives in the country.

Further, the researchers found that the average worker in the UK only saw their salaries increase by 2% to just under £23,500 (R436,800) – meaning it would take about 167 years for the average worker to match a CEO salary.

Among the top 100 companies specifically, the mean pay ratio between CEOs and the mean pay package of their employees is 145:1, the group said.

South Africa

High levels of pay among executives is a huge point of contention the world over, including South Africa – widely known to have one of the highest levels of inequality in the world.

According to Stats SA, average monthly earnings paid to employees in the formal non-agricultural sector decreased from R20,060 in November 2017 to R19,858 in February 2018 – though this was up 5% year on year from R18,913 in February 2017.

Expressed as an annual salary, this equates to R238,300 a year.

By comparison, the latest findings from PwC’s 10th edition of the Executive directors: Practices and remuneration trends report, showed that the average CEO of a JSE listed company in the upper levels is R8.75 million. This can jump as high as an average of R25 million among the biggest listed companies.

Executives in the upper quartile saw an 11% increase in average salaries from the previous year – compared to the inflation-tracking increase of 6% for average workers.

Using the same metric as the UK, this shows that South African workers would have to work 36 years to match the average CEO salary – or 105 years to match the salary of the top 10 average.

According to PwC, the pay ratio in South Africa – worker pay to CEO pay – was at 65:1 in 2018, up from 62:1 in 2017.

We looked at the top 25 companies on the JSE, and worked out the pay ratios between CEOs and the workers at each group. Salaries below the average ratio (65:1) are highlighted in green, while ratios exceeding 100:1 are highlighted in red.

All figures were taken from the latest-available full year results, covering 2017 and 2018. Employee numbers are those across the entire group, not South Africa, specifically. All currencies were converted at their respective rates on 16 August 2018. While Discovery is among the top 25 companies, it does not report on staff costs, and was thus excluded.

One of the outliers in the table above is Remgro. As a holding company, the group employs a small contingent of staff – however, as part of its bid to retain skilled talent, it says that it treats its employees well.

As part of this, the group lists salaries and wages paid at R4.27 billion in its 2017 results.

Read: South Africa vs BRIC countries – average salaries, GDP and unemployment compared

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Chief executive vs employee pay at South Africa’s 25 biggest companies