EXECUTIVE salaries skyrocketed between 2005 and 2012, leading to calls by Finance Minister Pravin Gordhan and Cosatu for the situation to be addressed.
The issue has come to the fore with the publication of a book, Executive Salaries – Who Should Have a Say on Pay? by Kaylan Massie and Debbie Collier together with Sunday Times journalist Ann Crotty.
In the foreword, Gordhan calls for a new business culture rooted in empathy and one that goes the extra mile “to enhance the lives of the poor and contribute to the transformation of our economy and society”.
He said the private sector had a big role to play in the rebalancing of the access to opportunities.
However, union federation Cosatu said what was needed from the government was not appeals to business for responsibility and fairness but radical policies to implement the ANC’s “second phase of the transition”.
“This must include fiscal policies to unlock the R1.2-trillion which the capitalists are refusing to invest in the economy, taxes on the very rich and a statutory minimum wage,” it said.
Cosatu spokesman Patrick Craven said the evidence emerging of the growing inequality strengthened the federation’s argument for a statutory minimum wage and a massive redistribution of the country’s wealth in favour of the workers.
According to the authors, the average chief executive’s cash and benefits package in 2005 was R15-million and in 2012 almost R13.1-million‚ excluding stock options.
However‚ when the gains made on the vesting and exercise of share incentives was included this average rose to R49-million‚ nearly triple the 2005 figure. This made SA executives the second most highly paid in the world when the comparisons are made on a purchasing power basis.
The authors analysed the salaries earned by the executives of 50 top firms.
The most often cited is Shoprite chief executive Whitey Basson who earns a guaranteed R41-million a year, regardless of his or the company’s performance.
Naspers’s Koos Bekker in 2012 earned more than R1-billion from the share options which vested in that year‚ also not linked to performance.
Massie told the Cape Town Press Club on Wednesday South Africa was falling behind internationally in terms of the regulation of executive pay.
One way to control salaries‚ she said, was to give stakeholders such as shareholders‚ boards of directors and employees a greater say over remuneration for example by having representation on the remuneration committees.
Another solution would be to require greater disclosure of executive pay and pay differentials within a company.
She noted that in some countries chief executives were not allowed to sit on the remuneration committees which was not the case in South Africa.
Crotty said given the way that workers’ pay had been reined in to the level of inflation, it was probable that the income gap had widened considerably.
She urged ordinary investors to put pressure on their fund managers to limit increases in executive salaries. – Linda Ensor