Non-executive increases dropped in 2013

Payments to non-executive directors did not rise significantly last year after large increase in previous years. Image: Nongpimmy Free Digital Photos

This is a major finding of the latest report by advisory services firm PricewaterhouseCoopers, (PwC) in its latest report on non-executive directors' fees.

However‚ the report showed an increase of more than 51% in the remuneration of chairpersons of the top 40 companies in the basic resources sector listed on the JSE‚ and an increase of 48.1% for non-executives in the same industry.

These increases have been attributed to the companies paying their directors in foreign currency.

The huge pay gap between workers and executives have been a great concern in SA‚ especially in the mining sector where strikes loom again following tough wage negotiations.

The Democratic Alliance has asked for the provisions in the Companies Act dealing with executive pay to be strengthened to improve transparency and boost shareholder activism.

Gerald Seegers‚ PwC head of human resources‚ said at the release of the report in Johannesburg that the data was collected until November last year. Given the huge decline in the value of the Rand against all major currencies the data will show a worsening position in the 2014 report‚ he said.

South Africans earning less

He also said 13% of the total of 2‚204 non-executive directors sitting on the boards of 358 JSE-listed companies were earning 63% of the total fees. He said South African non-executive directors were being paid at least 2.5 times less than their international counterparts‚ mainly because of a weaker currency.

The median chairperson's fee across the JSE has risen by 7.1% to R422‚000 while the median fee for non-executives across all the sectors only rose by 4.3% to R288‚000.

In the financial sector which accounts for 24% of listed companies on the JSE‚ total fees paid to non-executives increased by 9.3% compared with 26.2% in 2012.

In the industrial sector‚ accounting for 29% of listed companies on the JSE‚ the overall fees at the median level rose from R889‚000 to R901‚000‚ almost double where they were in 2011.

Seegers said there has been a decline in the number of non-executive directors in SA‚ with one of the reason being the decline in the number of listed companies on the JSE from 373 in 2012 to 358 last year. Despite the decline in the number of companies‚ Seegers said the decline was expected because of increased risks because of the increased compliance burden.

He said "purpose driven businesses"‚ where the aim is purposeful engagement with all stakeholders‚ should be more concerned about the quality of their directors than the quantity. "The days of having a mindless checklist approach to compliance are gone. What we need is some intellectual integrity where the directors have to be asking probing questions," he added.

Seegers said there was a direct link between a purpose driven company‚ the composition of its board and executive remuneration.