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SA’s proposed executive remuneration rules ‘worst in world’

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earningsBL Premium reports that corporate SA could soon have the “most onerous law” on public company remuneration in the world, according to Vodacom and other written submissions on the Companies Amendment Bill.

The bill, before a parliamentary portfolio committee, suggests multiple changes to the Companies Act and tries to give shareholders more influence over how much listed companies pay their top executives. Currently, votes by shareholders on how much CEOs earn in SA are advisory, with little consequence. The Companies Act allows shareholders two votes on executive pay and when one or both votes does not get the required 75%, companies must meet dissenting voters. The new bill proposes giving shareholders a binding vote on pay, meaning that if more than 50% do not agree to executive CEO, CFO and non-executive remuneration they will not be paid these amounts. Quite how this would work in practice is not clear as shareholders vote on pay once a year, after it has taken place. As Ansie Ramalho, chair of the King Committee, told MPs on Tuesday: “It is ineffective to unscramble the remuneration egg. It is a fait accompli when it gets to voting [on pay].” But the need for consequences for failed votes is apparent when in many cases they fail year after year. The new draft law also proposes that if a single vote does not get more than 50%, the remuneration committee must step down immediately. The committee members will remain on the board as non-executive directors but will have no more say on pay. Criticism on this proposal has been unanimous. “Nowhere in the world does this happen,” the JSE said in its written submission to MPs.

  • Read the full original of the report in the above regard by Katharine Child at BusinessLive (subscriber access only)


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