Professional services company PwC has published its report on South African non-executive directors for 2021, highlighting how much top board members are earning in the country right now.
The report focuses primarily on publicly available information, sourced from the JSE, AltX, the FTSE 100, the FTSE 250 and other stock exchanges.
As directors’ fees rarely follow a standard distribution curve, PwC used quartile/percentage range rather than averages.
In an analysis of the data, PwC said it is difficult to gauge how the Covid-19 pandemic has impacted executive salaries in South Africa, as it has impacted different industries to varying extents.
“The response to this impact has been that some non-executive directors took a temporary or permanent reduction in fees, or did not receive increases,” it said.
“By contrast, Covid-19 may have resulted in additional meetings and the associated payment of ad-hoc fees for such meetings may have countered the effect of fee suppression in some instances.”
The pandemic has also led to the movement of companies between large cap, medium cap and small cap categories which might distort the analysis slightly.
Because of these changes and other factors, PwC said that the data should be for information purposes only and not for benchmarking.
An examination of all fees paid to JSE and AltX non-executive directors shows that the average salary was R1.89 million for chairpersons.
“The role of a chairperson is time-consuming as it includes work carried out between scheduled meetings, representing the organisation externally, and interacting with fellow board members and employees,” PwC said.
An examination of all fees paid to JSE and AltX non-executive directors shows that the average salary was R1.28 million for deputy chairpersons.
“It is essential that the chair and the deputy chair have a good working relationship and understand their roles to ensure that duplication or confused direction does not occur,” PwC said.
Lead independent director
An examination of all fees paid to JSE and AltX non-executive directors shows that the average salary was R1.06 million for lead independent directors.
The lead independent director is required to preside at all meetings of the board at which the chairperson is not present or where the chairperson is conflicted.
Their duties include calling meetings of the independent directors, where necessary, and serving as the principal liaison between the independent directors and the chairperson.
Their responsibilities would also include liaising with major shareholders if requested by the board in circumstances in which the chairperson is conflicted.
An examination of all fees paid to JSE and AltX non-executive directors shows that the average salary was R1.04 million for non-executive directors.
Non-executive directors are required to make up the majority of a board’s membership and should preferably be independent, PwC said.
While the above data provides an overview of the average salaries across the JSE, board members at ‘super-cap’ companies – making up the top 10 of the JSE – can expect to earn substantially more.
In 2019 these companies included:
- AB InBev;
- British American Tobacco;
- BHP Billiton;
- Anglo American;
- Vodacom Group Ltd.
PwC’s data shows that the average salary for a chairperson at a super cap is R12 million, while the average salary for a non-executive director at a super cap company is R3.64 million.