CEOS over­paid

Finweek English Edition - - MANAGEMENT -

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.

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