{"id":237029,"date":"2018-04-10T16:19:03","date_gmt":"2018-04-10T14:19:03","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=237029"},"modified":"2018-04-10T16:19:03","modified_gmt":"2018-04-10T14:19:03","slug":"how-much-ceos-cfos-and-directors-earn-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/wealth\/237029\/how-much-ceos-cfos-and-directors-earn-in-south-africa\/","title":{"rendered":"How much CEOs, CFOs and directors earn in South Africa"},"content":{"rendered":"

Remuneration specialists 21st Century has released its latest pay barometer for 2018<\/a><\/strong>, detailing how much money executives earn across South Africa’s JSE-listed companies.<\/p>\n

Executive remuneration continues to remain under the spotlight in South Africa, however the barometer noted that it was not CEOs that saw the biggest increases last year,<\/p>\n

CFOs received the highest median salary increase of 8% of TGP (Total Guaranteed Package), followed closely by CEOs with a median of 7.6% and Executive Directors which had a median increase of 7%.<\/p>\n

All three of these medians are in excess of the median for general staff employees according to 21st<\/span>\u00a0Century\u2019s increase report.<\/p>\n

Unsurprisingly, executives earn more depending on the size of the company, with CEOs at large cap businesses earning an average total guaranteed package of R5.25 million, while CEOs at small cap companies earn an average of R2.77 million.<\/p>\n

Similarly, executive directors can expect to earn R3.5 million at large cap companies, while those at small cap companies can expect to earn an average of R1.8 million.<\/p>\n

Total Guaranteed Package by company size<\/strong><\/p>\n

\n
\n\n\n\n\n\n
Position<\/th>\nSmall cap<\/th>\nMedium cap<\/th>\nLarge cap<\/th>\n<\/tr>\n
CEO<\/td>\nR2 772 000<\/td>\nR3 215 500<\/td>\nR5 250 000<\/td>\n<\/tr>\n
CFO<\/td>\nR1 800 500<\/td>\n\u00a0R2 160 000<\/td>\nR3 541 000<\/td>\n<\/tr>\n
Executive director<\/td>\nR1 805 500<\/td>\nR2 234 000<\/td>\nR3 516 000<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n
\n

Incentives\u00a0<\/strong><\/p>\n

While\u00a0TGP is an important part of executive remuneration, it is only one piece of the three-piece puzzle that makes up executive remuneration, said\u00a021st Century.<\/p>\n

“Variable pay\u00a0is a significant part of an executive\u2019s pay structure and consists of short term incentives (STI) and long term incentives (LTI),” it said.<\/p>\n

“Short term incentives\u00a0are typically made up of cash pay outs for reaching short term goals (usually less than one year) whereas\u00a0long term incentives are commonly paid out in the form of equity in the business for long term performance (usually 3 years or more).<\/p>\n

“As a result, the valuation of\u00a0unvested LTIs\u00a0has been a point of contention which has been fiercely debated in many circles. Unvested LTIs are the equity held by a participant that has not reached the date of maturity for payment,” it said.<\/p>\n

21st Century found that CEOs receive the largest percentage of STIs and LTIs at each company size.<\/p>\n

This is compounded by the fact that CEOs also received the highest median TGP at each company size \u2013 a larger % on a larger guaranteed pay.<\/p>\n

CFOs and Executive Directors are comparable in terms of their median percentage of STIs and LTIs, although generally CFOs receive a larger percentage of variable pay than Executive Directors.<\/p>\n

This results in CFOs having larger median total earnings compared to Executive Directors, even though Executive Directors had a marginally higher median TGP at each company size.<\/p>\n

The graph below shows the mix of annualised STI and LTI payments as a percentage of TGP \u2013 the annualised figure is calculated as the portion of variable pay that will be paid out annually if all performance conditions are met.<\/p>\n

\"\"<\/a><\/p>\n

\n

Shares<\/strong><\/p>\n

As part of its analysis, 21 Century also noted that the\u00a0mix of vehicles used for compiling a LTI requires analysis – as the conditions attached to an LTI scheme can significantly affect the value of these shares.<\/p>\n

‘Full shares’ place the full value of the share in the hands of the recipient and can be sold at full face value at the time of sale.<\/p>\n

In comparison, ‘Appreciation shares’ are given to the holder at a particular strike price (deemed value at point of award) and the holder is only entitled to the difference between the strike price and face value at the time of sale.<\/p>\n

The chief difference between these two types of shares is that full shares still have value even if the price of the share declines whereas appreciation shares only have value if the share price is above the strike price, said 21st Century.<\/p>\n

“A rule of thumb at present market conditions is that 3 appreciation shares approximately equal one full share in value at vesting.”<\/p>\n

“The dominant form of shares awarded to executives at each company size is appreciation shares (even if the vested value is taken into account).<\/p>\n

“Large companies have the highest prevalence of awarding\u00a0full shares\u00a0to their executives \u2013 which coincides with the higher percentages of LTIs given to each kind of executive in large companies,” it said.<\/p>\n

\n

The Share mix can exceed 100% as some executives receive both kinds of shares.<\/em><\/p>\n<\/div>\n

\n
\n\n\n\n\n\n
Position<\/th>\nSmall cap<\/th>\nMedium cap<\/th>\nLarge cap<\/th>\n<\/tr>\n
CEO<\/td>\n13% full share vs 88% appreciation share<\/td>\n11%\u00a0full share vs 95% appreciation share<\/td>\n42%\u00a0full share vs 77% appreciation share<\/td>\n<\/tr>\n
CFO<\/td>\n\u00a027%\u00a0full share vs 89%\u00a0appreciation share<\/td>\n\u00a023%\u00a0full share vs 86%\u00a0appreciation share<\/td>\n46% full share\u00a0 vs 77%\u00a0appreciation share<\/td>\n<\/tr>\n
Executive director<\/td>\n9%\u00a0full share vs 91%\u00a0appreciation share<\/td>\n33%\u00a0full share vs 75%\u00a0\u00a0appreciation share<\/td>\n36%\u00a0full share vs 86%\u00a0\u00a0appreciation share<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n
\n

Read: How much money South Africa\u2019s billionaires earn every day<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Remuneration specialists 21st Century has released its latest pay barometer for 2018, detailing how much executives earn across South Africa’s JSE-listed companies.<\/p>\n","protected":false},"author":10,"featured_media":146451,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9880],"tags":[12975,26],"class_list":["post-237029","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth","tag-21st-century","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/237029","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=237029"}],"version-history":[{"count":13,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/237029\/revisions"}],"predecessor-version":[{"id":237057,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/237029\/revisions\/237057"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/146451"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=237029"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=237029"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=237029"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}