20100713
allafrica

Johannesburg — SA's banks have emerged from the global recession in a much healthier state than their UK and US counterparts.

remuneration paid to executive directors in the financial services sector increased by 7%, according to a new report issued by PricewaterhouseCoopers (PwC) yesterday.

Whilethis is a much smaller increase than was seen in 2008 (23%), there has still been an increase, said Gerald Seegers, PwC South African director for human resources (tax division). By way of comparison, base salary increases awarded to executives of FTSE 100 companies over a similar period were limited to around 1%.

Although there is no clear evidence that the South African financial services sector is flawed or failing, global pressure and the need for international alignment on the regulation of executive remuneration in this sector is likely to lead to changes in the structure in the future. The Reserve Bank

has not yet followed other regulators in publishing regulations or codes of practice governing executive remuneration. One of the reasons for thisseems to be that the South African banks have ridden the wave of economic crisis well compared with banks in other jurisdictions and have not needed bailing out by the government.

The PwC report also disclosed that performance bonuses paid by large- and small-cap JSE listed companies last year had fallen. For example, the median performance bonus paid to executive directors of the large-caps fell from R2,9m to R2,4m. The small-cap bonus median fell from R1,76m to R974,000.

The report also included the packages of executive directors of various sized companies, including selected sectors. The data was drawn from information publicly available at close of business April 30.

For large-cap companies, the data showed yearly aggregate increases in guaranteed packages of 4% (2009), 31% (2008) and 14% (2007). The median guaranteed package (base pay and benefits) for an executive director of a large-cap company was now R3,9m.

Aggregate increases in guaranteed packages for medium-cap companies reflected a steady increase of 12% (2009), 12% (2008) and 10% (2007). In this size of company, the median guaranteed package was R2,6m, with the median performance bonus at R1,5m.

Mr Seegers cautioned the remuneration committee to consider shareholder and public perceptions, as well as economic conditions. "They must be sensitive in deciding how to deal with underwater share grants as well as 2010 bonuses, particularly in sectors where the recession is still being felt - and especially in an economy where the lowest paid workers have annual salaries of around R42 000. This equates to a pay gap in the order of 250-300 times."