Business Watch-Oped-Executive pay shoots up from sublime to the ludicrous
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18 February 2005

Executive pay in South Africa is far
from modest. Whether companies are doing well thanks to external
factors or thanks to a chief executive's hard work and vision, the pay
levels out there are going through the roof.

Interestingly, the UK-listed companies with secondary listings
in South Africa appear to be more tempered when it comes to
remuneration – a clear indication that shareholder activism is working
in the UK and a sign that it's far from being effective in South

Only the Public Investment Commissioners and Frater Asset Management appear to give a damn.

shareholders are unfazed about how much they are paying their employees
to run their companies. Of course, this may be because the only people
who can afford to be significant shareholders in South Africa are
highly paid executives.

A few weeks back, one asset manager,
when asked if he examined executive pay levels, said: "No, but I
probably should, hey?" Yes! It's a no brainer.

But executives
here will tell you that far too much is being made of executive pay.
Well – that's akin to talking your own book.

Logically, if
executive pay continues to outstrip company performance and you plot it
along a straight line graph, then 10 or 20 years from now remuneration
levels will be so far removed from reality as to be ludicrous. And
don't think I'm suggesting that they aren't already ludicrous.

the stories that roll out on this topic in the weeks to come we're
hoping to highlight the anomalies and the successes, the guys unfairly
coining it and the people who are measured in their approach to money.

of our contentions when working on this project was that an unintended
consequence of executive pay disclosure was the spiralling upwards of
remuneration levels.
Our intended consequence of examining this
issue was that shareholders would speak out more and executives would
rein in their pay a bit.

We hope that one of our unintended
consequences won't be the increase in executive pay levels since chief
executives will now have an even clearer view of what their peers are