By Luthando Brukwe
Richemont’s Richard Lepeu earned R93.91m in 2016
It’s the end of the financial year for many listed companies, where results linked to performance will be unveiled in many such entities. However, what will be conspicuous in its absence is detailed performance linked to executive pay and structures. The reconstitution of various boards won’t be based on transformation, health and safety records, corporate governance, etc; but will be based solely on unmandated shareholder (mostly institutional) mandates. Take the recent Group Five saga for example, where one of its major shareholders, Allan Gray, put forward a motion to reconstitute the board because it had lost faith in it http://www.iol.co.za/business-report/group-five-directors-to-tender-resignations-9974893. Then there were speculations that former Governor Tito Mboweni resigned with immediate effect over the disagreement over the direction of the cement company which had two days prior to the resignation, informed shareholders it was engaged in formal talks with Afrisam about a merger https://www.businesslive.co.za/bd/companies/industrials/2017-07-20-why-tito-mboweni-quit-ppc8217s-board/
The sad reality is that we seem powerless over these ridiculous executive remuneration structures. I still find it hard to believe the proposed bonuses for Eskom executives while they presided over an ailing parastatal. The Naspers’ CEO Bob van Dijk is accused by a Swiss based investor firm of wiping out R334 billion shareholder value since joining the company in last three years. Contrast that performance to his reported earnings of more than R24 million in the last 12months according to Moneyweb. Naspers is the parent company of Media 24, Multi-Choice and Tencent in China.
According to Sunday Times 2016 top twelve of the twenty (20) richest earners, van Dyk earned peanuts. His counterparts earn in excess of R90million per annum. Here’s the Sunday Times’ List:
1. Richard Lepeu of CEO Richemont South Africa earned R 93.91 million;
2. Nico Durante CEO of BAT earned R73.66 million;
3. Gary Saage CFO Richemont earned R71.21 (mind you both CE and CF earned a combined (R164.21 million);
4. Markus Jooste CEO of Steinhoff earned R62.86 amongst others;
5. For the rest of the earners following link: https://www.timeslive.co.za/news/south-africa/2017-06-28-r69000-a-day-ceos/
This must be an abomination in a country faced with high levels of poverty, unemployment and inequality. The same should be said for the constant bail-outs of your SAAs of this world on the backdrop of parastatal executives who are milking public coffers. Imagine if this money could be re-directed to job creating capital intensive sectors such as mining with attached conditions that the bail-out should not go to executives.
This then begs the question, where do we start in addressing what is seemingly daylight looting?
I guess my first prize would be to address state coffers. To this end then I would propose that all public servants including executives should not be earning more than R1,5 million per annum. While it may seem high in some people’s eyes, it pales when compared to the reported minimum of R 69 000 per day currently earned by various CEOs. My view is based on the principle that being a public servant is more about serving the people and the Republic more than it is about accumulation wealth, right of wealth?
In light of current Labour Relations Principles and in order to accommodate my proposal above, the Minister of Finance through SARS should take the remainder of the money from those earning in excess of R1,5 million, and deposit it into the National Health Insurance, Comprehensive Social Security and Tertiary Education Funds, amongst others. For private companies, the limit should range from R5 -10 million cap all inclusive depending on the size of the company and revenue generated in that financial year.
Of course these measures must go hand-and-in-glove with strengthened state democratic institutions to ensure we deal swiftly with corruption, racketeering and maladministration. We must never forget that the main purpose is to achieve a prosperous democratic dispensation with reduced levels of inequality, employment created and minimal levels of poverty. The assumptions that goes with these ideas are that equal pay for equal work principles will apply, with the eradication of apartheid wage gaps based on colour, gender and creed.
I’d imagine there could be tax breaks or incentives for those who contribute towards social infrastructure and the delivery of welfare services in public-private partnerships.
We have to come up with creative means of building our democracy and a better life for all its people. The current excessive remuneration packages for executives and senior management, both in public and private entities, borders on immoral and unethical conduct by all parties concerned more so in the current South African context.
Luthando Brukwe is National Union of Mineworkers (NUM) Head of Transformation