Standard fights back after pay flak

 Johannesburg - Standard Bank [JSE:SBK] CEO Jacko Maree earned considerably less in 2009 than reported by the media.

Despite claims that his 2009 package totalled R18.2m, bank spokesperson Erik Larsen says it was actually R5.9m. The cash portion amounted to R4.9m, which was supplemented by benefits worth R251 000 and a pension scheme contribution of R759 000.

This is much less than in 2008, Larsen noted.

Remuneration packages of banking chief executives are once again under fire after sharp criticism from Finance Minister Pravin Gordhan in parliament. This criticism was largely based on a recent Bloomberg report and a study by the Computus Group.

Maree and Tom Boardman – who has been reported to have earned R43m in his final year as Nedbank chief executive – were singled out.

According to Larsen, various share options in terms of share-incentive schemes have been awarded over the years to Maree, who has been chief executive since 1999.

In 2009, when there were no profits, Maree did not exercise any options.

An amount of R6.6m was entered as an expense on the income statement in terms of international IFRS accounting standards. Maree did not receive that amount that year.

If this amount is added to Maree’s basic pay, his remuneration could have been R12.5m. This highlights the problem that arises with share options, in that annual reports do not clearly indicate how and when options are indeed exercised.

The exercise of options depends on various factors, such as a share price increase and the share’s initial price, which must be deducted from the selling price. If the share price is lower than the issue price, it's an expense to the company.

In 2009 Maree did not receive a bonus after having received a R8.5m bonus in 2008. The cash portion of his remuneration package that year was R4.5m and his benefits and pension scheme contributions R273 000 and R745 000 respectively, bringing the total package to R14m.

According to Larsen, a deferred bonus of R2.5m was payable to Maree in March 2009. Had he received this, it would have been indicated as such in his remuneration package for the year.

Maree exercised no share options in 2008. A total of R6.4m was noted as an expense. If this were added to his 2008 remuneration, he might have earned R23m.

Nedbank’s latest annual report shows that Boardman's total remuneration was R14.5m, 40% higher than in 2008. It consisted of a basic salary of R4.6m, pension contributions of R354 000, guaranteed compensation of R5m and a performance bonus of R9.5m which, at Boardman’s request, was converted into shares.

Boardman’s 2008 package was R10.4m, 11.5% less than in the previous year.

Boardman also owns extensive options, including 100 000 and 120 000 shares issued at R76 and R110 per share respectively. If Boardman had exercised these at Nedbank’s closing price of R137 on Friday, he theoretically would have been R9.3m richer.

He also has various other share interests, including those he bought himself, as well as options that expire in 2012.


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