Deloitte has published its annual Executive Compensation Report, showing what top executives earn in South Africa.
The 2018 report analyses the remuneration disclosures of executives from JSE listed companies over the past 7 years, and paints a picture of how executive pay has shifted over the years, and a possible way forward.
The high level of executive pay has come under fire in businesses across the world, but the impact has been highlighted in countries like South Africa, which has been labelled as the most unequal country in the world.
The focus is on the growing gap between those at the top of a company and the general workforce – where the former earn hundreds of times more than the latter.
Deloitte’s report looked at over 250 JSE listed companies, which stretched from top-tier (high market cap) groups to mid-tier and low-tier companies.
According to Deloitte, its assessment of current trends around executive pay found that:
- Executive pay has generally been aligned with a company’s performance and creation of value for shareholders, however over the past year pay has been resilient while company performance has been mixed because of the economy;
- Large, multinational companies pay the most – but the assessment of 250-plus companies listed on the JSE shows that pay isn’t necessarily linked to company size or sector;
- Executive pay consistently outstrips inflation, though is trending towards being more attuned to inflation;
- The gap between CEOs and CFOs and other executives is large – and thus the conversation around executive pay levels should be mindful of that;
- Executives almost always receive performance bonuses, and they are typically between 1x and 3x the base salary;
- Shareholders are getting more involved with executive pay, and remuneration reports are becoming more detailed and transparent;
- Expressing total pay as a single figure (the Single Figure Standard) is being adopted as per the King IV business rules.
In terms of remuneration, the report looks at three figures – an executive’s total guaranteed package (TGP) which is salary and benefits; the total annual compensation (TAC), which is the TGP plus bonuses; and finally the total remuneration (TR), which is the TAC plus the accrual in value of any long-term incentives.
Across all companies, the average CEO earns total remuneration of R8.6 million a year, while the average CFO takes home TR of R4.8 million.
The data shows that in among the top quartile of executives (top 25%), the average total remuneration (including guaranteed packages and all bonuses and incentives) ranges from R8.9 million to R85.4 million, depending on the size of the company.
At the bottom quartile (bottom 25%), this is significantly lower, ranging between R3.4 million and R29.9 million.
The middle range is R5.1 million (the average for small companies) to R40.9 million (for top companies).
The tables below show how much CEOs earn in South Africa.