<\/p>\n
Amendments to the Companies Act will compel companies to reveal the gap between the lowest-paid worker and the chief executive, essential information in a country often described\u00a0as the most unequal in the world.<\/p>\n
The\u00a0amendment to Section 30 of the Companies Act has been passed by parliament and is to be signed into law by the President.<\/p>\n
It will compel JSE-listed companies and public companies like Eskom to disclose pay ratios, and give shareholders binding voting power on remuneration policies.<\/p>\n
Read:<\/p>\n
Companies will have to disclose the total remuneration of the highest-paid employee, the total remuneration of the lowest-paid employee, the average total remuneration of all employees, and the median total remuneration of all employees (median is the salary in the middle, where half of employees earn more and half earn less).<\/p>\n
The new rules will help the public understand the \u201creasonableness\u201d of these pay structures.<\/p>\n
\nIs it reasonable to pay a chief executive R50 million a year? Under what conditions?<\/p>\n<\/blockquote>\n
Shoprite reported paying its chief executive Pieter Engelbrecht R68 million in its 2024 financial year. Shoprite provides over 150 000 jobs (in a country with such high unemployment, this adds real value). These workers, in turn, spend money at other local businesses, and keep money circulating within the country.<\/p>\n
Read:<\/p>\n
Shoprite execs, directors in R110m share award<\/div>\nSome banks and investment firms, however, pay extremely high remuneration packages while employing very few people.<\/p>\n
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\nBanks also have very few low-paid workers compared to retailers.<\/p>\n<\/blockquote>\n
The amendments will make visible what was often hard to see.<\/p>\n
Executives are often paid in shares and bonuses as well as salaries, and it is hard for anyone other than an accountant to understand executive remuneration \u2013 which includes vested and unvested shares, realised and deferred earnings et cetera \u2013 in some company annual reports.<\/p>\n
The Labour Research Service (LRS) monitors about 70 JSE-listed companies, and for the 2024 financial year, for the first time, we have looked at pay ratios for the JSE top 40. In that year, the amendments to the Companies Act had not yet come into effect, so we calculated the ratios based on the national minimum wage (NMW) of R27.58 per hour or R1 103.20 per week.<\/p>\n
\nOur top 20 list (from the JSE Top 40 companies) has Naspers at its head, with the CEO\u2019s remuneration of more than R344 million in the 2024 financial year resulting in a pay ratio of over 6 000:1.<\/p>\n<\/blockquote>\n
The average ratio on the list is 1 270:1; and the median is 939:1.<\/p>\n
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<\/strong>SA CEO remuneration <\/strong>in relation to the national minimum wage<\/strong>
<\/strong>
<\/strong><\/td>\n<\/tr>\n\n Ranking<\/strong><\/td>\n Company<\/strong><\/td>\n CEO\u00a0<\/strong>pay<\/strong>
FY2024<\/strong><\/td>\nRatio to<\/strong>
NMW<\/strong><\/td>\n<\/tr>\n\n 1<\/td>\n Naspers<\/td>\n R344,698,113<\/td>\n 6,009<\/td>\n<\/tr>\n \n 2<\/td>\n BHP Group<\/td>\n R157,648,149<\/td>\n 2,748<\/td>\n<\/tr>\n \n 3<\/td>\n Richemont<\/td>\n R143,796,923<\/td>\n 2,507<\/td>\n<\/tr>\n \n 4<\/td>\n Bid Corporation<\/td>\n R134,797,000<\/td>\n 2,350<\/td>\n<\/tr>\n \n 5<\/td>\n Investec<\/td>\n R124,690,476<\/td>\n 2,174<\/td>\n<\/tr>\n \n 6<\/td>\n South32<\/td>\n R97,112,498<\/td>\n 1,693<\/td>\n<\/tr>\n \n 7<\/td>\n Nedbank Group<\/td>\n R96,856,000<\/td>\n 1,688<\/td>\n<\/tr>\n \n 8<\/td>\n Glencore<\/td>\n R95,727,272<\/td>\n 1,669<\/td>\n<\/tr>\n \n 9<\/td>\n Standard Bank Group<\/td>\n R89,216,000<\/td>\n 1,555<\/td>\n<\/tr>\n \n 10<\/td>\n British American Tobacco<\/td>\n R87,188,993<\/td>\n 1,520<\/td>\n<\/tr>\n \n 11<\/td>\n AngloGold Ashanti<\/td>\n R83,857,727<\/td>\n 1,462<\/td>\n<\/tr>\n \n 12<\/td>\n Anglo American<\/td>\n R80,076,735<\/td>\n 1,396<\/td>\n<\/tr>\n \n 13<\/td>\n Mondi<\/td>\n R69,607,134<\/td>\n 1,213<\/td>\n<\/tr>\n \n 14<\/td>\n Shoprite Holdings<\/td>\n R68,523,000<\/td>\n 1,194<\/td>\n<\/tr>\n \n 15<\/td>\n The Bidvest Group<\/td>\n R66,946,000<\/td>\n 1,167<\/td>\n<\/tr>\n \n 16<\/td>\n Capitec Bank Holdings<\/td>\n R65,740,000<\/td>\n 1,146<\/td>\n<\/tr>\n \n 17<\/td>\n NEPI Rockcastle<\/td>\n R64,995,100<\/td>\n 1,133<\/td>\n<\/tr>\n \n 18<\/td>\n Vodacom Group<\/td>\n R61,741,761<\/td>\n 1,076<\/td>\n<\/tr>\n \n 19<\/td>\n FirstRand<\/td>\n R60,710,000<\/td>\n 1,058<\/td>\n<\/tr>\n \n 20<\/td>\n Impala Platinum Holdings<\/td>\n R53,864,000<\/td>\n 939<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n These numbers are big.<\/p>\n
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Naspers chief executive Bob van Dijk earned over R340 million in a single year (with the new chief executive Fabricio Bloisi to earn close to R1 billion for this financial year).<\/p>\n
Read:<\/p>\n
Inside Prosus CEO\u2019s $100m (R1.7bn) \u2018moonshot\u2019 incentive<\/div>\nIt is true that Naspers does not only operate in South Africa, but it has a significant presence here and benefits from hard-working people in South Africa and across the African continent.<\/p>\n
Naspers is a bit of an outlier.<\/p>\n
Let\u2019s look at Standard Bank, eighth on our list. It would take a minimum wage earner over 1 500 years of working full time to earn the R89 million that Sim Tshabalala earned in 2024. Or, at R27.58 per hour, or 3.2 million hours of work.<\/p>\n
Read: In bank boss merry-go-round, there\u2019s only one clear winner \u2026\u00a0<\/p>\n
These figures are significantly higher than recommended by the United Nations Research Institute for Social Development for developing countries, where a more equitable and socially responsible range for executive remuneration to minimum wage is roughly 10-50:1 as a normative range, with about 30:1 as a midpoint (Executive to Average\/Typical Worker Pay).<\/p>\n
\nCompanies claim that remuneration packages are performance-based.<\/p>\n<\/blockquote>\n
However, a recent\u00a0study\u00a0by the Labour Research Service and Active Shareholder (reported on by Ann Crotty) in Currency News showed that the link between profits and remuneration packages is random.<\/p>\n
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CONTINUE READING BELOW<\/p>\n<\/p><\/div>\n<\/div>\n
Listen\/read: \u2018Obscene\u2019 CEO packages spark fresh outrage amid SA\u2019s harsh realities<\/p>\n
Active shareholders often vote against huge remuneration packages, but the company is not obliged to take this into account. However, this is set to change.<\/p>\n
\nBinding votes will make it much harder for remuneration committees to hand out huge packages and golden handshakes.<\/p>\n<\/blockquote>\n
Huge executive packages are a key driver of income inequality, and increasing inequality severely impedes social mobility. According to some\u00a0estimates, in South Africa, 10% of the population earns 55%-60% of all income. In advanced economies, this number is closer to 20-35%.<\/p>\n
Read:<\/p>\n
Why wage inequality matters<\/div>\nThe next 40% of the South African population (considered the \u2018middle class\u2019) earn about 30-35% of all income but only own 5-10% of all wealth. The poorest 50% of the population earn only about 10% of the income and own no wealth.<\/p>\n
Dr Salom\u00e9 Teuteberg leads the Transforming Corporate Governance programme at the Labour Research Service in Cape Town.<\/em><\/p>\n
\u00a9 2025 GroundUp. This article was first published\u00a0here.<\/div>\nFollow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\n