Meeting minimum compliance standards won't guarantee success for South African businesses navigating their initial reporting period under the revised Companies Act remuneration rules.
Martin Hopkins, Master Reward Specialist and South African Reward Association (Sara) member, cautions that the true hurdle lies in securing investor trust well before remuneration frameworks and reports face a shareholder vote.
"The amendments, which came into force on 22 May 2026, fundamentally change the way companies need to think about remuneration governance," says Hopkins. "The focus is no longer simply on producing a remuneration report. Companies now need to produce policies that shareholders are prepared to support."
Binding remuneration policies raise the bar
One of the biggest changes is that a company's remuneration policy is now binding and must be approved by shareholders every three years through an ordinary resolution.
That means companies must carefully balance the level of detail included in the policy. It needs to give shareholders enough information to make an informed decision, while remaining relevant over the three-year period.
"The challenge is getting that balance right," says Hopkins. "Too much detail can make a policy difficult to apply over three years. Too little may not give shareholders enough confidence to support it."
He says policies must also cover areas that were previously left to committee discretion, including annual increases, remuneration offers to new executives, sign-on awards and termination payments.
Camille Rabier 21 Apr 2026 Shareholder engagement should start now
Hopkins believes companies should not wait until their annual general meeting to engage shareholders.
Instead, remuneration committees should already be reviewing concerns raised in previous years, consulting major shareholders before remuneration reports are published and testing support for any proposed policy changes.
"Early engagement gives companies the opportunity to understand shareholder expectations and resolve concerns before they become shareholder objections," he says.
Failed shareholder votes carry real consequences
The amendments also increase accountability for remuneration committee members.
If shareholders do not approve a remuneration report, committee members must stand for re-election to the committee and explain the reasons for shareholder dissatisfaction at the next AGM. If shareholders reject the implementation report for a second consecutive year, committee members who served throughout the reporting period must step down from the remuneration committee for at least 24 months.
"A loss of experienced committee members can be disruptive at a time when remuneration governance expertise is already in short supply," says Hopkins.
Camille Rabier 4 May 2026 New pay gap disclosures add complexity
Companies will also need to prepare for expanded remuneration reporting, including new disclosures on the remuneration of the highest and lowest paid employees, average and median employee remuneration, and the ratio between the highest and lowest paid 5% of employees.
Hopkins says these disclosures require careful consideration because the Companies Act adopts the Labour Relations Act's broad definition of an employee, which includes learners, apprentices, part-time employees and employees who may only have worked for a short period.
"Companies need to present this information in a way that gives shareholders a meaningful understanding of their remuneration practices," he says.
More than a compliance exercise
Hopkins says boards should resist viewing the amendments as simply another compliance requirement.
"These changes increase accountability and make clear, honest communication with shareholders more important than ever," he says. "Boards and remuneration committees should be working now with management, advisers and shareholders to address concerns and build support for their remuneration policies well before their next AGM."
