Give directors a benchmark
CONGRATULATIONS ON a really good summary of company performance – I read it cover to cover ( The Top 200, 2007). Your listing of directors’ remuneration particularly amused me. The fact that you gave no comment on that table was almost comment in itself.
For example, I’ve long griped at the way Sappi’s directors have enriched themselves at the expense of its shareholders and I recently gave up my shares in disgust at their awful performance. To see that the directors made off with 40% of the profits was a clear signal that they’d gone from merely mad to plain bad.
Of course, if the directors owned a large part of the company they’d be justified in taking a large part of the profits. However, in general that’s not the case. The Sappi directors don’t own enough of the company to feature in your listing.
Further down the list was that dot.com disaster Dimension Data. The hurrahs for the maiden dividend, for those courageous enough to have seen their R70/share investment col- lapse to R2/share and then recover to R7/share, might have been a bit more muted had they realised that the directors had made off with 25% of the money that should, by rights, have been theirs. Didata’s directors also don’t own enough to feature in the lists. Then you come to those mighty black empowerment enterprises. For example, Sekunjalo struggles along generating less than 14% on its assets and currently has a negative quick ratio, yet the directors took 160% of the profits for themselves. They do own 16% of the company but they seem to value that above other shareholders.
Gijima manages an 8% return on total assets but currently has a positive quick ratio. Its directors took a more modest 40% of the profits, which is very reasonable when you consider they own nearly 40% of the company. Mvela Resources has done well in the recent resources boom, but you have to ask if the directors should have taken nearly 60% of the profit when they own 7% of the company.
These figures have to be contrasted with what the big boys earn. BHP Billiton manages to pay its directors only 0,31% of its profits, Anglo American 0,18%, Sanlam 0,23% and Nedbank 0,64%.
Perhaps it’s time for those much vaunted “remuneration committees” to receive a personal copy of your listing. It would give them a benchmark they obviously lack.