# General Business Category > Business Finance Forum >  Non-executive directors underpaid in SA

## 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?

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## xcorporation

there is no limit towards rock bottom

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desA (09-Apr-14)

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## desA

With a de-industrialising economy in free-fall, being quickly overtaken by its neighbours - not sure the Directors have much to bargain with...

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## Justloadit

A very curved ball indeed.
When comparing workers wages, home and abroad, you have to state what you are comparing too.

A short list :-
Education
Work performance
Detailed job description
Responsibility level of production quality - in other words if you f..ck up who pays for the f...ck up?
Production figures
Production incentives
House subsidy
Medical aid
Other benefits

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## Blurock

Considering the pay gap and general poverty in this country, I think the executives are being paid far too much. That is why big corporate companies are overcharging their customers to pay for the overheads.

If an entrepreneur earns a good return as reward for his initiative and the risk of his capital investment, I do not have a problem with it. I have a problem where listed companies employ executives who get paid in $ or Euro "to bring them on par with other countries". The reality is that are not Europe or the USA. We live in a developing country and the remuneration should fit the job. Those executives are only employees and have not risked anything. How do you justify a salary package of R50 million p.a. but you cannot afford to pay your workers a decent wage?

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## HR Solutions

> How do you justify a salary package of R50 million p.a. but you cannot afford to pay your workers a decent wage?


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 ?

Its a tough one because yes some of the "workers" out there are not getting paid what they are worth, but in the same aspect, some companies work on the basis that if they don't like their wage, they can leave and the company will just hire someone else, because there are plenty of people running around out there that are unqualified and have no skills and are looking for a job.

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## Blurock

> 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 ?
> 
> Its a tough one because yes some of the "workers" out there are not getting paid what they are worth, but in the same aspect, some companies work on the basis that if they don't like their wage, they can leave and the company will just hire someone else, because there are plenty of people running around out there that are unqualified and have no skills and are looking for a job.


I've been in the corporate world for a long time and I have seen senior executives come and go. Most of the time the organisation would have managed without them. They are nothing but glorified managers. 

There are very few leaders that can claim (or deserve) an executive package of more than R2mil p.a. If you don't like it, find yourself a job in the USA or Europe where you can earn $$ but don't have the tax breaks, job security, quality of life and general corporate benefits that you enjoy in South Africa. Nobody is worth R50 mil in South Africa!

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## Justloadit

The problems start where most of the employees are unqualified. The kind of work they are doing, can be done by anyone, as you do not need to be qualified.
Right now, most of the MPs in government and senior positions in municipalities and parastatals are not qualified to be in the position they are in, but are earning more money than most of the business owners on this site.

There in lies the problem. 
Creating a minimum wage with job protection, simply takes the incentive out of any worker to better himself. 
This is the situation we are faced with currently.
You will note that any worker who has qualifications, and is capable of doing the work, is probably paid fairly well for their position. If they are not being paid well, then the worker should find some one who does, and let me tell you there are many out there who will pay for skilled staff.

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Dave A (17-Jul-14)

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## HR Solutions

> Nobody is worth R50 mil in South Africa!


Sure ........ that seems a tad high for a years salary  :Wink:

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## Dave A

> If they are not being paid well, then the worker should find some one who does, and let me tell you there are many out there who will pay for skilled staff.


Very true!

I also think the minimum wage of R900k per annum + perks for being a member of parliament is a bit steep. If you have a portfolio and some responsibility, I don't mind if the pull a bar though.
Except there's no such thing as being held responsible and accountable for a government minister nowadays, it seems  :Stick Out Tongue: 

We can but dream...

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## Blurock

> 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?

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## 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.

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## Blurock

> 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!

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## Leonp

> 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.

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## Justloadit

> 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.

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## Leonp

> 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.

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## Justloadit

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


I concur  :Scooter:

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## Blurock

> 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)

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## Justloadit

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.

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