I was dumb struck to read that SASOL has increased the pay of its CEO by 68%. I am also amazed, but not surprised, to see that the CEO accepted the increase. The biggest challenge currently facing resource companies, especially those operating in South Africa, 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 amongst union members as well as the escalating wage costs of labour in South Africa.
Having given the CEO a 68% increase will seriously hamper the ability of the company to negotiate any limitation on salary increases in future negotiations with unions. The unions and their members will, and rightly so in my opinion, 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 amongst 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, dammed lies and then statistics. We also know that so many value judgments need to go into selecting the comparable data to use in compering remuneration, that these research reports are meaningless and self-serving. This never ending merry-go-round of executive remuneration surveys serves no purpose other than to inflate the average to which executive salaries are compered, resulting in another round of massive increases.
The reason advanced by the company for the massive increase is to “attract, motivate and retain talented employees and align the interests of shareholders and executives”. In this regard the CEO accepted a five year contract just one and 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 massive salaries to executives whilst 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 executive’s pockets at my expense.
The biggest problem, however, is a business problem. By accepting such a gigantean increase, the CEO has clearly indicated that he is out of touch with a world beset by financial problems and, in particular, out of touch with the realities on the ground in South Africa.
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