President Cyril Ramaphosa’s cabinet has approved the Companies Amendment Bill of 2021 for public comment, with the draft bill set to be officially gazetted in the coming weeks.
First mooted in 2018, the bill proposes substantial changes to the South African Companies Act, including further disclosures around executive pay in the country.
One of the key focuses of the new bill is ‘wage ratios’, with companies expected to be more transparent on the difference between the lowest- and highest-paid earners.
In line with this, the 2018 version of the bill proposed that the following information would have to be disclosed on an annual basis:
- The total remuneration of the highest-paid employee in the company;
- The total remuneration of the lowest-paid employee in the company;
- The average and the median remuneration of all employees;
- The remuneration gap reflecting the ratio between the lowest and the highest-paid employees.
While it remains to be seen the exact details that will be required of companies in the 2021 version of the bill, the Department of Trade, Industry and Competition has confirmed that wage ratios will be included.
High levels of pay among executives is a huge point of contention the world over, including in South Africa. Several JSE-listed companies have come under scrutiny from shareholders for high levels of executive pay.
2020 saw a significant spike in shareholders of listed companies voting against high executive pay at Annual Genral Meetings, particularly in the finance sector.
Data published by Statistics South Africa this week shows that the average salary paid to employees in the formal sector was up marginally by 1.7% quarter on quarter from R23,127 in February 2021 to R23,526 in May 2021.
This equates to an annual salary of around R282,312 a year, excluding any additional bonuses or incentives.
By comparison, data published by Professional services company PwC in August shows that total guaranteed package (TGP) fees paid across the JSE give a median salary for chief executives at R5.17 million over the period.
The median pay for chief financial officers was R3.34 million, and the median pay for executive directors was R3.32 million.