Non-executive directors underpaid in SA

**Blurock** · 21-Jul-14, 01:58 PM

Originally Posted by HR Solutions

Yes I do agree with you.

But - If some people grow up - study hard - obtain a degree or two and are extremely qualified in what they do ..... add value to a company, help to grow the company and ensure that the company is making a lot of money ..... then they should be paid well.

So as much as - yes there is a big gap between the very high earners and the poor - a company should and must pay the people that are contributing to their turnover. If you turn it around slightly - why should the company make the money and not pay the executive ?

The difference in executive pay and earnings of shareholders is; the executive is very often there for a limited period, while the shareholder has to ride the wave until he gets a reasonable return. The executives take no risk (other than making the wrong decisions) and have very little loyalty other than financial gain. The shareholders on the other hand, have a financial commitment which can often not be withdrawn on the whim.

It is the same with government. The minister is not the one doing the work. He is the one making the decisions, based on what his advisers are telling him. He also has to see that the outcome is what his boss (the president or the party) wants. The minister is there for a limited period of time and may not even know all the names of his senior staff. The populace are the ones having to deal with the results of the ministers' decisions.

In business your most important stakeholders (apart from customers) are the shareholders (who risk their capital for a return) and the staff, who has to make things happen. Without these two, you will not have any customers or suppliers. Why is it then that staff and shareholders are getting a smaller return than the hired executives?

**Dave A** · 21-Jul-14, 07:26 PM

Blurock's post kinda shows the importance of some level of emotional attachment. Fortunately not all execs are mercenaries, but obviously plenty are.

**Blurock** · 22-Jul-14, 11:17 AM

Originally Posted by Dave A

Blurock's post kinda shows the importance of some level of emotional attachment. Fortunately not all execs are mercenaries, but obviously plenty are.

Don't get me wrong, there are some very competent executives running some of our top companies. I also do not have a problem with remuneration of someone who really deserves it. If my salesman earns more in commission than I am earning, I do not have a problem with it. It means that he is selling and that the business is growing. Right now, we have an engineer earning as much as the MD and the FD together. We do not have a problem with that, as he is adding value that we all will benefit from.

My problem lies with the "boys clubs" where I sit on your board and you sit on my board as members of the remuneration committees. If I approve your 50% increase from R10 million to R20 million, you will obviously approve mine too. So we slap each other on the back and f@#k the shareholders!

**Leonp** · 22-Jul-14, 11:32 AM

Originally Posted by Blurock

PWC has released a study on executive remuneration in South Africa. According to them, South African excecutives are under paid compared to international trends. So what about the workers, how do they compare? What is your opinion?

the Uk has a minimum wage of around R14000 per month i believe? so our workers are underpaid compared to the first world.

Executives on the other hand, well, if it costs R20 million (exec salary) to create and sustain 10 000 jobs and an attached value chain for a year, then by al means we can solve our unemployment problem (3 000 000) by spending R600 000 000 rand a year on executives.

from that point of view, by all means pay them R20 mil a year. Pay them R50 mil a year. the 3 million new economically active and value chain pays for it by far.

**Justloadit** · 22-Jul-14, 01:25 PM

Originally Posted by Leonp

the Uk has a minimum wage of around R14000 per month i believe? so our workers are underpaid compared to the first world.

The R15,000 rand rent for an apartment in London as a minimum I believe, so our local rent is far underpaid. At R24 a liter in London average I believe, so our local fuel is under paid.

Simply looking at the figure is no comparison. One has to look at all aspects of the cost of living to understand the value of wages. You will find on average, European employees way over educated in many jobs, which they hold because they simply can not get jobs that they studied for, and have accepted another job to feed the family.

**Leonp** · 23-Jul-14, 01:46 PM

Originally Posted by Justloadit

The R15,000 rand rent for an apartment in London as a minimum I believe, so our local rent is far underpaid. At R24 a liter in London average I believe, so our local fuel is under paid.

Simply looking at the figure is no comparison. One has to look at all aspects of the cost of living to understand the value of wages. You will find on average, European employees way over educated in many jobs, which they hold because they simply can not get jobs that they studied for, and have accepted another job to feed the family.

yes yes the OP asked for an opinion on comparisons with the rest of the world. the typical minimum wager in south africa wont rent an apartment, will use a taxi, and wont have a pension plan beyond the gov social grant. i don't know, i'm asking, does the typical minimum wager in the UK own a car, have a pension plan and be able to educate their children?

but I'm digressing from the point of my post: regardless of the value of a minimum wage, execs are worth their millions if they create jobs throughout the spectrum.

**Justloadit** · 23-Jul-14, 07:57 PM

Originally Posted by Leonp

execs are worth their millions if they create jobs throughout the spectrum.

I concur

**Blurock** · 23-Jul-14, 11:17 PM

Originally Posted by Leonp

regardless of the value of a minimum wage, execs are worth their millions if they create jobs throughout the spectrum.

Fact is they don't. The first thing they do when times are tough, is to retrench - and then reward themselves with a bonus! Do you want examples? Just look at the banks and big corporates. This is a worldwide business phenomenon that is finding its way into government as well.

So are execs worth their millions? I say no. (with one or two exceptions)

**Justloadit** · 24-Jul-14, 06:18 AM

So lets fire the whole lot of execs then. Who ever takes their positions is certainly not going to work for minimum wages, the responsibilities is just far too much.

Currently the CEO for one of the motor vehicle manufacturers in USA is being taken to court because of a faulty ignition switch.
Recently one of the oil company execs was taken to court about the Gulf oil spill, and many more of these.
There is huge responsibility in theses positions.

In many instances the CEO's are not directly involved with the original decisions, but when the sh!t hits the fan, they have to be creative to handle it and maintain the company in a profitable situation, amongst this is all the red tape and legislation that has to be monitored and adhered too. Its far more complicated than siting in a plush office racking in the bucks.