Around the time that the JSE introduced executive pay disclosure (in line with the requirements of the Companies Act and King III corporate governance rules), the CEO of a company I i nvested i n went on leave for t hree months.
His publicly disclosed salar y had caused quite a stir among t he staff. Employees worked out how many zeros they would have to add to their own pay cheque to come close to t hat of t he CEO. My own thoughts were dominated by concern for how the company would f a re over t he coming t hree months. If someone was worth that amount of money, I f igured, then the company should suffer in his absence.
As it t urns out, my concerns were unfounded. Everything carried on as usual. In fact, I doubt whether most employees even knew the CEO was gone. One explanation for this is that the CEO was particularly good at delegating his responsibilities to a team of highly competent senior executives. Another more disturbing explanation is that the CEO wasn’t adding much value in the f irst place and certainly didn’t deserve the huge salary he was receiving.