CEOS PAY CUT BY 13%, SAYS STUDY

New bosses ‘ get lower salaries ’

RESEARCH has found that financial directors of JSElisted companies have on average received hefty annual pay increases of 42% in 2011 and 20% in 2012.

The study, conducted by audit firm PricewaterhouseCoopers (PWC), and released yesterday in Johannesburg, also showed that the annual pay of chief executives declined by 13% last year.

PWC Southern Africa human resource director Gerald Seegers said the reason the salaries of CEOs decreased drastically was due to companies reshuffling positions and chief executives leaving.

“Companies paid incoming CEOs lower salaries than their predecessors,” Seegers explained.

The study also found that the CEOs’ total guaranteed package amounted to R3.8-million while their lowest paid employees earned a measly R70 200 a year.

Labour economist Mike Schussler said there was no correlation between return of shareholders funds and basic remuneration.

“I don’t think companies should be restrained in determining their CEO’s salaries,” Schussler said.

“CEO remuneration should be linked to company performance.”

He said while CEOs in other countries largely focused on helping companies to generate a profit, in South Africa they were bogged down on softer issues, which included transformation.

Schussler also bemoaned that SA had one of the lowest numbers of adults who were working.

He added that employees who required higher wage increases impacted negatively on the unemployed.

Trade union federation Cosatu spokesman Patrick Craven disagreed with Schussler.

Craven said low income earners were in many instances breadwinners who supported large families and they would prefer to have their relatives hired to ease the burden.

Schussler said companies needed to answer how management could share the firm’s income between the management and workers equitably.

The report also showed that in China total guaranteed pay package stood at R825 100 and their lowest-paid workers earned R40 600 a year.

Labour analyst Loane Sharp said firms performed well due to the structure of incentives.

“The biggest problem in SA is that there is no link between pay and productivity.

“If this link could be introduced, chances are high that companies would pay higher wages, ” he said.