Execs rake in the cash

2010-09-18 07:22

Three of South Africa’s largest state-owned companies paid their ­executive directors a total of R113.6 million in salaries in the year to March 2010.

This figure is marginally lower than the R134.8 million they made last year as the recession and the global economic slowdown affected the earnings of parastatals.

The money went to 39 executives at development financier the Industrial Development Corporation (IDC), logistics group Transnet and electricity provider Eskom.

This amounts to an average of R2.9 million each. The current packages declined from an average of R3.4 million last year.

In contrast, average pay for ­employees increased 9.5% this year. Transnet’s employees received the biggest pay increases (at 11.5%) after a three-week strike.

Eskom narrowly avoided ­industrial action during the soccer World Cup when it agreed at the last minute to increase salaries by 9%.

However, trade union federation Cosatu this week poured cold water on the lower executive remuneration.

“Those packages were previously outrageously excessive in the first place,” said spokesperson Patrick Craven.

“It will not alter the fact that South Africa is a highly unequal society. It shall not deter us from seeking to ­improve the salaries of lower-paid workers.”

The executives were rewarded for bringing in R9 billion to the taxpayer, a 110% increase on the R997 million profit achieved in the year to March 2009.

That figure was heavily distorted by Eskom’s R9.7 billion loss last year. Transnet and the IDC brought in R5 billion and R5.6 billion, respectively.

The biggest beneficiary of the 2010 financial rewards was Eskom’s newly appointed Brian Dames, who received the nod as chief executive earlier this year. Dames received a 91% increase on his 2009 package when he was still chief officer for generation. The increase took his to total package to R5.7 million from R2.9 million the previous year.

Dames was promoted to chief executive after Jacob Maroga was ousted in a dramatic board tussle in October.

For the nine months Maroga worked as Eskom’s chief executive in financial 2010, he was handsomely rewarded with a R4.7 million package, including a R1.2 million short-term bonus.

However, Maroga may not have been the best-paid state-owned executive. That title belongs to former Transnet Freight Rail chief executive Siyabonga Gama, who was suspended for financial and tender irregularities in September before finally getting the chop in June.

Gama worked for only five months in the year before being suspended. While he was on suspension and going through his disciplinary hearing on full pay, he received R4.1 million.

That translates to more than R800 000 a month for each of the five months he was in the office.

The biggest loser in monetary terms was the IDC’s Geoffrey Qhena, whose 2009 R10.2 million package dropped to R4.2 million this year.

That was after the IDC’s net profit dropped from R5.6 billion to R2.2 billion in the reporting period, meaning he had to forfeit his performance bonuses.

The IDC also did not pay any of its employees bonuses because of the missed performance targets in a tough recessionary year.

Shareholder activist Theo Botha, who normally has harsh criticism for company executives, said because state-owned companies paid lower salaries after getting lower profits, this was a welcome development.

“It’s a step in the right direction,” said Botha. Next is to put structures in place to ensure sustainability.

He said chief executives should be the last to be paid performance bonuses even when companies performed well.

“The line managers and other employees should be awarded first because the chief executive’s success depends on them,” said Botha.

− Fin24

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