Prize for putting ‘pay’ in opaque?
Nedbank has learnt since award for 2013 remuneration report: last year’s is a model of obfuscation
POSSIBLY the most interesting aspect of Nedbank’s 2014 annual report released this week was the revelation that an entity called the South African Reward Association exists. Less interesting but just as surprising was the news that it awarded Nedbank the Remuneration Report of the Year award for its 2013 report.
Nedbank doesn’t reveal why it was selected. Judging by the 2014 remuneration report, it can hardly have been because of the clarity with which Nedbank writes on remuneration issues. But perhaps Nedbank’s 2013 remuneration report was much easier to read.
Or perhaps the association gives the award not for the quality and clarity of prose, but for the ability to provide the most complex and torturous explanation of why a senior executive should be paid huge sums of money.
Executive remuneration has become a ridiculously complex issue. The remuneration industry claims this is because of the complexity of the subject and the need for detailed nuance. The average layperson, which includes journalists, suspects the dense detail is designed to sabotage close inspection of individual cases.
Nowhere are such attempts at sabotage more evident than in the banking industry. For international banks the additional complexity is blamed on regulators who are now keen to be seen to be trying to restrain excessive and riskencouraging levels of pay.
Presumably local banks, which are left completely untroubled by regulators on this matter, don’t want to be seen to be any less complex or sophisticated.
Banks should be trimmed down to a size where their remuneration report is understandable and credible to outsiders. And until that happens the association should avoid encouraging their dense verbosity with awards.
Barclays Africa Group
IF AN award had to be made to a bank for its remuneration report, then certainly this week’s award should go to Barclays Africa, whose report on what its executives were paid last year is complicated but reasonably clear.
It might lose points because of the introduction of “rolebased pay”, which is a canny device used to ensure that no matter what regulators do, executives will always get paid well. This device might come back to haunt Barclays Africa’s remuneration committee when profit performance becomes more strained and the bank is tied to a much higher fixed level of remuneration.
Capitec
TALKING of banking, this week the former lead executive behind the phenomenal growth of Capitec, Riaan Stassen, offloaded another batch of his shares. Stassen, who played a major role in developing Capitec into the fifth-largest bank in South Africa, sold off R109-million worth of shares early in the week.
This is the largest tranche of shares he has sold since his retirement as CEO in 2013. In total he has sold off R196-million worth of Capitec shares since leaving the group. Over that time the share price performance has steadily confounded sceptics and perhaps Stassen.
Sceptics had claimed it was overpriced at R200. Stassen’s latest sales were done at around R500 a share.
Dawn
THIS week’s announcement of the resignation of long-serving Tak Hiemstra from the Dawn board brings attention back to a company that has been through difficult times in recent months.
Hiemstra’s departure is understood to have nothing to do with the building material supplier’s spectacularly unsuccessful attempt to buy out its BEE shareholders, Ukhamba Holdings.
Ukhamba has close ties with the Imperial Group, where Hiemstra served as a director for many years.
The failed attempt to buy out the BEE shareholders at what proved to be a ridiculous premium due to the dramatic slump in the share price has drawn attention to the steady decline in Dawn’s profit performance over the years.
Once able to boast operating margins as high as 12%, in recent years the group has struggled to achieve 5%. This is partly attributed to its increasing focus on manufacturing over trading at a time when Eskom and general cost increases are making life extremely difficult for South African manufacturers.
Last year’s deal with multinational Grohe generated a lot of excitement but shareholders have yet to see much benefit.
PPC
ON Thursday PPC moved to quash market speculation that the termination of merger discussions with AfriSam meant its Algerian plans were propelled to the forefront.
In a Sens statement released in the afternoon it described as “factually inaccurate” market reports about its proposed Algerian partnership with Hodna Cement. “PPC wishes to confirm that there is no change to its previously stated position that the feasibility study has not yet been concluded and the PPC board has not yet made a final determination on this project,” the statement read.
The news saw the share slump to just under R18 by the close. This puts it at about half the price that prevailed in September last year before the spectacular bust-up with former CEO Ketso Gordhan.