Costly move for Sasol
DEAR SIR — I was dumbstruck to read that Sasol has increased the pay of its CEO by 68% (Sasol lifts CEO pay to match global levels, October 11). I am also amazed, but not surprised, to see that the CEO accepted the increase.
The biggest challenge facing resource companies, especially those operating in SA, is containing costs. Resource companies cannot control the price at which their product is sold, but they can control costs. Sasol will no doubt be fully aware of the current militancy among union members and the escalating wage costs of labour in SA.
Giving the CEO a 68% increase will seriously hamper the company’s ability to negotiate any limitation on salary increases in future negotiations with unions. The unions and their members will — and rightly so — view the company’s protestations about the need to control salary costs as both morally bankrupt and disingenuous.
A 68% increase for the CEO does not put food on the table or provide education for children, this is already provided for in the ample remuneration package paid before the increase. The workers at the company, on the other hand, are fighting for an increase to put food on the table and to educate their children and, in the South African context, to keep their heads above water when it comes to debt. It is little wonder that bitterness and militancy among union members is on the increase.
Referring to “benchmark data provided by national and international executive remuneration surveys, as well as survey reports from independent agencies” just adds fuel to the fire. We all know the saying that there are lies, damned lies and then statistics. We also know that so many value judgments go into selecting data to use in comparing remuneration that these research reports are meaningless and self-serving. This never-ending merrygo-round of executive remuneration surveys serves no purpose other than to inflate the average to which executive salaries are compared, resulting in another round of large increases.
The reason advanced by the company for the gigantic increase is to “attract, motivate and retain talented employees and align the interests of shareholders and executives”. The CEO accepted a five-year contract just oneand-a-half years ago. Accordingly attracting him did not seem to be a problem. As a very small shareholder in the company I can attest that paying giant salaries to executives while causing untold labour strife and wage inflation in the process does not align my interest with that of the executives. More likely, it lines the executives’ pockets at my expense.
The biggest problem, however, is a business problem. By accepting such a gigantic increase, the CEO has clearly indicated that he is out of touch with a world beset by financial problems and the realities on the ground in SA.
JC le Roux
Via e-mail