PWC Executive Directors Report 2017

9th edition, July 2017, South Africa
Executive directors
Practices and remuneration trends report
www.pwc.co.za/executive-directors-report
Contents
Executive summary A new model for Executive directors Appendices

executive pay remuneration: JSE
3 trends 80
26
47
Sources of The South African
information CEO succession in a marketplace
digital world FTSE 100
4 executive director The FTSE 100
30 remuneration trends marketplace 2017
Global regulatory
68 The African marketplace
2017 (seven countries,
update The economics and excluding South Africa)
ethics of pay
6 Remuneration trends About PwC
34 in other sub-Saharan
Acknowledgements
African countries
Remuneration
practices and Gender parity: The
75 Contacts
KingIV hidden value
14 38
Say on pay: A global Profile of an executive

perspective director
19 44
Executive directors: Practices and remuneration trends report 9th edition: July 2017 2
Executive summary
It gives us great pleasure to share the ninth edition of our Executive directors Practices
and remuneration trends report: South Africa with all our clients and board members.
While governments across the globe The trend is unfortunately in the wrong At our cut-off date of 28 April 2017 there
continue to grapple with the idea directionthe fact that the richest 1% were 360 active JSE-listed companies
of increasing the regulation around of the worlds population now have as with a combined market capitalisation
executive pay in an attempt to curb much wealth as the rest of the world of R14.0 trillion. Industrials continue to extended our analysis to the UK and
perceived excessive pay levels, combined is an alarming statistic. Many lead the pack with 48.8% of the total, have observed similar trends among
executives in the private sector have business leaders and governments are followed by financial services (17.9%), FTSE 100 companies, which now
come under pressure to adapt to the losing public confidence, and there basic resources (16.6%), services represent 45% of the total market
changing business environment. The is a real perception that business and (15.5%), AltX (0.1%) and preference capitalisation of the LSE.
increasing digitisation of the business political leaders are not doing enough to shares (1.1%).
Our executives face a number of
world has increased this pressure. address fairness and inequality. We take
Only 33 companies account for 80% of challenges navigating organisations in
a closer look at this issue in this edition.
In South Africa, there is a strong the total market capitalisation on the todays business environment while at
movement (inspired by the provisions of Our research on key trends in executive JSE. Large-caps hold 83%, medium-caps the same time managing employees
KingIV) pushing for listed companies remuneration continues. Executives 12% and small-caps 5%. demands that their workplace have a
to adopt better remuneration reporting at all levels have shown remuneration clear meaning and purpose, and fit with
The top-100 companies, comprising
and shareholder engagement practices, increases of around 6%. Our analysis their values.
large- and medium-caps, account for
and for all organisations to implement of pay statistics indicates that the
95% of total JSE-listed invested capital.
fair and responsible remuneration Gini coefficient of the employed has
The top-10 companies account for 60%
policies. remained steady at 0.43. Going forward,
of the JSEs total market capitalisation.
there should be a greater focus on the
In our 2014 edition, we initiated our We analyse the average executive
financial wellness of junior workers and
discussion of the importance of aligning remuneration of this group for the first
on addressing the issues of inequality,
an organisations purpose with executive time.
unemployment and poverty.
remuneration. Business leaders today
We continue our analysis of seven
are expected to do the right thing and The gender imbalance is still evident.
African stock exchanges and observe
act for the betterment of all rather While 40% of todays global workforce
some interesting trends around
than for personal gain, and therefore is female, women hold only 5% of global
executive remuneration across the
need to take full responsibility for their CEO positions. On a positive note, Anelisa Keke
continent. For the second time, weve
companys impact on all its stakeholders. the percentage of female executives Editor
leading JSE-listed companies is slowly
increasing.
Sources of information
Fig 1. Market cap by sector value It is noteworthy that 33 (2015: 30) of Median (50th percentile)
The data used in this distribution JSE-listed companies account for 80% of 50% of the sample earn more than
the markets capitalisation. Large-caps this level and 50% of the sample earn
publication has been hold 83% (2015:85%), medium-caps less.
drawn from information Industrial
12% (2015:11%) and small-caps 5%
Upper quartile (75th percentile)
(2015:4%).
publicly available 48.8% Financial
services
17.9%
25% of the sample earn more than
this level and 75% earn less.
for the 12-month Basic
resources Services
The top-100 companies, comprising
large- and medium-caps, account for Since the introduction of this annual
reporting period ended 16.6%
Preference
15.5%
AltX 95% (2015: 96%) of the total invested publication in June 2009, we have
28April2017.
shares
1.1% 0.1%
capital on the JSE. held that there is no direct correlation
between market capitalisation and the
Information was extracted from the Format of information remuneration of executive directors.
annual reports of 360 (2015: 360) However, we believe that market
and definitions capitalisation gives a good indication
actively trading companies listed on
the Johannesburg Securities Exchange Source: PwC analysis of size and complexity and is an
Remuneration levels rarely follow a appropriate metric to set peer groups
(JSE), which had a total market normal distribution curverather, these
capitalisation of R14.0 trillion (2015: We have excluded the directors of those and for benchmarking purposes. It
levels tend to fluctuate. For this reason, is against this backdrop that data is
R14.7 trillion). companies that have either delisted or
we have used a quartile/percentile analysed.
were suspended during the reporting
range rather than giving averages
At our cut-off date of 28 April 2017, an period. Residual market capitalisation
and standard deviations that assume The market capitalisation breakpoints
analysis of the market capitalisation for these companies is also excluded.
normality. are:
reflects the following: To avoid double counting, we have
excluded directors on boards with only
The quartiles/percentiles are defined as: Large-cap: The top-40 JSE-listed
preferential shares.
companies;
Lower quartile (25th percentile)
75% of the sample earn more than Medium-cap: 41 to 100 of the JSE-
this level and 25% earn less. listed companies; and
Small-cap: 101 to 360 of the JSE-
listed companies.
Sources of information
For the first time, we have separately Terms used in this publication
analysed information pertaining to
the top-10 listed companies by market
capitalisation.
Total guaranteed package Johannesburg securities exchange
(TGP)
All components of remuneration that The JSE is the largest stock exchange in Africa.
As the box and whisker chart below
are guaranteed, including base salary The number of companies listed at 28 April 2017 and for the last ten years are
shows, outliers are excluded in both
and benefits that typically accrue on shown below.
maximum and minimum values.
a monthly basis (retirement, medical,
Percentile classifications used in travel allowance, etc.). Fig 2. Number of companies listed on the JSE, 2007-2016
this report Short-term incentive (STI)
All cash-based payments that are paid
Outlier More than 1/5
times the upper quartile
to an individual based on company
and individual performance for a 411 411
12-month period. STI differs from 396
383
373
Maximum Greatest value, target STI, which is reflective of the 358 354 355 360 360
excluding outliers companys policy regarding potential
STI earnings.
Long-term incentive (LTI)
Upper quartile 25% of
data is greater than this value All cash and equity-based awards
that accrue to an individual based on
company performance over a period
Median 50% of data is greater longer than 12 months.
than this value: middle of
dataset Variable pay
Refers to short-term incentives and
long-term incentives.
Lower quartile 25% of data Share gain 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
is less than this value
Gains earned on LTI.
Source: PwC analysis
Minimum Least value,

excluding outliers
Outlier Less than 1/5

times the lower quartile
Global regulatory update
On one hand, this could curb what are Australia

Executive remuneration perceived to be excessive pay levels
and force more companies to firmly ASX 100 executive remuneration trends
continues to come align executive pay to the companys
under close scrutiny financial performance as well as the PwC Australia conducted an analysis of CEOs, executives and non-executive
creation of sustainable value in society. remuneration packages for executives directors typically received 2-3% fixed
from stakeholders, and On the other, regulations may lack serving on companies listed on pay increases. PwC Australia noted that
governments across the nuance necessary to address all the Australian Stock Exchange (in these increases were often higher than
possible scenarios and may constrain a particular, the ASX 100) versus the average workers increases of 1.9%.
the world are starting companys ability to adapt pay structures companys overall financial performance
to grapple with the to suit new business realities. during the 2016 financial year.1 Highlights from PwC Australias
research:
possibility of increasing The following sections set out Australian gross domestic product
the regulation of governance trends in executive increased by 2.4%, and ASX 100 Median fixed pay movements for
remuneration in several territories. companies delivered low returns with same incumbents were:
executive pay levels. It appears that some countries have average EBIT2 growth at 0.6% for the
2.4% for CEOs (3.5% for those that
sought to regulate remuneration for year to 30 June 2016.
received an increase);
companies falling within specific sectors
(e.g. financial institutions), whereas Overall ASX 100 growth was -5.1% for 1.9% for other executives (6.2% for
others have addressed all publicly listed the same period. Against this backdrop, those that received an increase);
companies. CEOs achieved an average of 101% of and
their STI targets, and other executives
1.3% for NEDs (4.5% for those that
averaged 95% of their STI targets. This
received an increase).
suggests that threshold and stretch
levels may not have been stretching Remuneration packages showed a
enough. marginal movement toward more
variable pay in FY16.

1
PwC Australia 10 minutes on2016 Executive Median STI payments were on target,
remuneration trends: fair pay for a fair days
work? May 2017, available at http://www. with many companies paying out very
pwc.com.au/publications/pdf/10-minutes- similar amounts to last year.
executive-remuneration-may17.pdf, accessed on
31May2017.

2
Earnings before interest and tax.
While relative total shareholder When it comes to trends in STI design, European Union
return (TSR) remains the dominant more ASX-100 companies are adopting
LTI measure, the use of earnings per STI deferral. Regarding LTIs, there EBA Report on High Earners 2015
share increased materially: has been an increase in the proportion
of ASX companies switching from In terms of Capital Requirements The population of high earners
As a measure used alongside
using fair value to face value when Directive IV (CRDIV)3, the European that are staff identified as having a
relative TSR (28% to 36%); and
determining their LTI allocations, and Banking Authority (EBA) is required to material impact on the institutions
As a sole hurdle (2% to 4%). more companies have indicated that publish aggregated data on high earners risk profile was almost the same as in
they will make similar changes in 2017. in financial services institutions earning 2014.
Internal hurdles vested more EUR1 million or more per financial year.
frequently than external hurdles: The length of remuneration reports
has increased marginally since FY2015, In February 2017, the EBA published its
68% of internal hurdles vested in
likely as a result of increased disclosure annual report on high earners, based on
part or full; and
on achievements relative to performance data as of the end of 2015.4 The main
54% of external hurdles vested in targets. results are:
part or full.
In 2017, boards and remuneration The number of high earners who
51% of the ASX 100 companies committees will have to consider have been awarded EUR1 million
require CEOs, and executives in some increased transparency and additional or more in annual remuneration for
instances, to hold a minimum value of shareholder engagement regarding the 2015 increased significantly from
shares. rationale behind how remuneration 3865 in 2014 to 5142 in 2015, driven
Across all ASX 100 companies, frameworks enable their corporate mainly by changes in the exchange
median shareholdings increased to strategy, and how remuneration rate between EUR and GBP, which led
229% of fixed pay for CEOs and 81% outcomes align with company to an increased income paid in GBP
for other executives. performance. when expressed in EUR. The largest
population of high earners in the EU
Source: PwC Australia
is located in the UK, which has 80.4%
of the total number of high earners.

3
Directive 2013/36/EU of the European Parliament
and of the Council of 26 June 2013 Official Journal
of the European Union at 338 436.

4
European Banking Authority EBA Report on
High Earners data as of end 2015 (2017),
available at https://www.eba.europa.eu/
documents/10180/1720738/EBA+Final+Repo
rt+on+High+Earners+2015.pdf, accessed on
04June2017.
United Kingdom
Green paper on corporate governance reform
The United Kingdom Department It frames a number of options regarding A section of the green paper is dedicated
for Business, Energy and Industrial the regulation of certain areas of to exploring options for strengthening
Strategy (BEIS) released a green paper executive pay, in terms of which it the employee, customer and wider
on corporate governance reform in requests that commentators and stakeholder voice. These options
November 2016.5 Its aim is: members of the public provide their include:
views on a number of issues. These
to focus on ensuring that include: Creating stakeholder advisory
executive pay is properly panels, or designating certain non-
Whether shareholders need stronger executive directors to provide a
aligned to long-term powers to improve their ability clear voice for key interested groups.
performance, giving greater to hold companies to account on Alternatively, individual stakeholder
voice to employees and executive pay and performance. The representatives could be appointed
consumers in the boardroom, green paper proposes several options to company boards, or reporting
and raising the bar for in this regard; requirements related to stakeholder
engagement could be enhanced.
governance standards in How to encourage shareholders to
the largest privately held engage on executive pay; The green paper also addresses
corporate governance in large privately
companies. Requiring remuneration committees
held businesses. Some options for
to improve their effectiveness, and
reform include:
require them to consult more widely
with shareholders and general
5
Available at https://www.gov.uk/government/ Applying enhanced standards of
uploads/system/uploads/attachment_data/ staff when preparing remuneration
corporate governance (i.e. the UK
file/584013/corporate-governance-reform-green- policies;
paper.pdf, accessed on 04 June 2017. Corporate Governance Code) more
Improving transparency on executive widely; and
remuneration; and
Applying reporting standards more
Whether LTIs should be revised as consistently.
a whole, due to their complexity
and their potential to incentivise
short-term behaviour in some
circumstances.
While the Committee acknowledges There is a difficulty associated with PwCs suggestions to bolster good Regarding quantitative disclosures
that the job of leading a major company setting meaningful forward-looking governance surrounding executive of pay relativities, the changes
is extremely taxing and requires performance metrics, with the result remuneration are as follows: in pay relativities are of more
great skill and commitment, and that that LTIP outcomes often did not importance than the pay ratio.
there should be appropriate reward match their intention, meaning In terms of pay fairness and Favour should be given to more
for such important roles, it expressed that LTIPs may fail to perform their differentials: scientific methods of determining
concern that overall pay levels have function. pay relativities, and to determining
The role of the remuneration
become so high that it is impossible and paying a living wage.
committee in this area should
to draw a credible link between pay Other observations included:
be considered, and potentially
and performance. This is compared to In terms of the danger of short-
broadened, and the interaction
average levels of pay, which in the UK Greater shareholder engagement on termism and its link to executive pay:
between the remuneration
have remained relatively stable. pay does not necessarily, of itself,
committee and the social and ethics Remuneration committees should
act as a force for restraint. There
committee should be carefully reconsider the form of long-term
Key concerns about executive pay which is conflicting evidence regarding
considered, in line with King IV TM; incentive awards, and consider
formed part of the Committees findings whether a binding vote on executive
the appropriateness of target-
include: remuneration has the effect of better The King IV TM recommended
driven plans in the context of the
accountability and greater incentives practices surrounding the ethics
historical outcomes of such plans
An ongoing trend towards higher for remuneration committees to of pay should be duly considered
and whether these outcomes have
executive pay, without commensurate consult more effectively. and applied, and companies
been aligned to performance
clear links to underlying corporate should adopt a fair remuneration
Employee representation on outcomes of the business, and the
performance; framework;
remuneration committees would ease with which the business is
LTIPs have a tendency to distort represent a powerful signal regarding Ensure that meaningful able to set meaningful prospective
executive behaviour, and a perception company culture and commitment to engagement surrounding pay performance targets;
that CEOs can take decisions affecting fair pay. levels takes place not only with
Traditional views on executive
the share price with an intention to shareholders, but also with
pay should be scrutinised by
influence the value of vesting awards; employees;
all stakeholders to ensure that
The prevalence of short-termism, Other initiatives through they withstand challenge, and
with a concern that share plans that appropriate means to increase institutional investors and proxy
operate over 1-3 years can encourage stakeholder voice (rather than advisors should be encouraged
short-term decision-making; and increases in shareholder powers to consider the possibility that
alone); and long-term share awards can, in the
right circumstances, be a legitimate
alternative to target-driven plans;
Alternative methods of long- Finally, remuneration committees Some of the requirements of an insurers Arrangements should be in place
term incentivisation should be should keep abreast of governance remuneration policy include: to ensure that SolvencyII staff
considered (our alternative model, tools at their disposal, such as malus undertake not to use personal
first presented in the 2013 edition, and clawback policies, and minimum A consistent remuneration policy hedging strategies or remuneration-
is set out in chapter 7); shareholding requirements. should be applied that is in line and liability-related insurance to
with the groups risk management undermine the risk alignment effects
Remuneration reporting should
Solvency II remuneration strategies; however, where an embedded in their remuneration
focus on a complete view of
requirements insurance group has a banking or arrangements.
incentives and the pay-for-
asset management entity, these
performance relationship; and The UK Prudential Regulatory Authority SolvencyII staff should have at
entities may require different
(PRA) released a Supervisory Statement least 40% of variable remuneration
Any new shareholder voting powers remuneration arrangements to be
on the SolvencyII remuneration deferred over a three-year period.
that are sought to be introduced applied.
requirements for UK insurers on 12 An insurers STI and LTI components
should use an escalation
August 2016.6 They apply to all firms Fixed and variable remuneration can be used in aggregate to address
mechanism to identify those
falling within the scope of SolvencyII. components need to be appropriately the 40% variable remuneration
companies that should be subjected
balanced, with the fixed portion requirement for SolvencyII staff in
to more stringent provisions when
Variable remuneration awards made representing a sufficiently high PRA Category 1 and 2 firms. These
they have demonstrated corporate
in respect of the 2016 performance proportion of total remuneration, firms do not need to apply the 40%
governance failures in terms of
year should be compliant with the allowing the operation of a deferral rule if an individual earns
executive remuneration (rather
Supervisory Statement. In terms of fully flexible policy on variable total remuneration of not more
than applying a more onerous
this, insurers must fill out the PRAs remuneration components, including than GBP500000 and variable
regime across the market).
SolvencyII Remuneration Policy the possibility of paying no variable remuneration of not more than 33%
Statement reporting template and remuneration. of their total remuneration.
In terms of managing overall executive
remuneration levels and improving submit it ten months after the end of the Variable remuneration paid to For the purposes of determining the
corporate governance, we suggest firms financial year. SolvencyII staff (staff whose 40% variable remuneration deferral
driving betterstewardship through professional activities have a requirement, the LTI should be valued
more transparency, better reporting material impact on the companys at the grant date at the maximum
6
For more information in this regard, see PwC UK
and, where appropriate, more employee The PRA Solvency II remuneration requirements
risk profile) engaged in risk potential value that could be paid
involvement. (2016), available at https://www.pwc.co.uk/assets/ management, compliance, internal out if 100% of the performance
pdf/pra-solvency-ii-remuneration-requirements.pdf, audit or actuarial functions should conditions were met.
accessed on 31 May 2017.
In particular, high-quality and honest be independent from the operational
Variable remuneration payable
reporting on executive remuneration is units under their control.
should vest (over a three-year
required to improve comparability and
Termination payments should be fair deferral period) no faster than on a
accountability, and in turn build public
and proportionate relative to prior pro rata basis from year1.
trust.
performance.
Malus must be applied to unvested South Africa

awards in the event of specific
management failures. The application Draft Prudential Standards for Insurers
of clawback is not required. The Financial Services Board (FSB) has The role of a board of directors is
It is recommended that firms should published a series of draft Insurance also set out, and in overseeing senior
adopt a balanced scorecard approach, Prudential Standards that will management and heads of control
consider the use of risk-adjusted manage the governance standards for functions, it must (among other
metrics and only use profit- or value- insurers.7 Prudential Standard GOI1 things) set appropriate performance
based measures such as TSR and (the Framework for Governance and and remuneration standards for senior
return on equity where they form part Operational Standards for Insurers) management consistent with the
of a balanced risk-adjusted scorecard. sets out the high-level framework long-term strategy and the financial
for assessing the governance and soundness of the insurer and monitor
The PRA will keep the Supervisory operational soundness of South African whether senior management are
Statement under review to reflect insurers from a regulatory perspective.8 meeting the performance goals set by
changes to the UK regulatory the board of directors.
framework, including changes arising It specifically identifies incentive
from Brexit. The SolvencyII Regulation arrangements that support sound and This duty was not as expressly set out in
contains certain principles that are prudent decision-making as one of the the governance framework published
similar to those found in CRDIV. cornerstones of strong governance. in Board Notice 158 (the Governance
and Risk Management Framework for
When compared to the South African Prudential Standard GOI2 (Governance Insurers).10
draft Prudential Authority governance of Insurers) states that insurers will
standards, the Supervisory Statement be required to have, inter alia, a The remuneration committee will have
has more detailed requirements around remuneration committee.9 to consist of at least three non-executive
the structure and composition of directors, the majority of whom must
remuneration paid to executives and be independent. The chairperson of the

7
Other than insurers that fall into certain specified
other material risk-takers. categories. The initial drafts were published for
board of directors may be a member of
comment, and comments closed on 26 May 2017. the remuneration committee, but may

8
Prudential Standard GO1 Framework for not be the chairperson.
Governance and Operational Standards for
Insurers Financial Services Board, published on 10
Board Notice 158, GG 38357 of 19 December
26 April 2017, available at https://www.fsb.co.za/ 2014.
Departments/insurance/Documents/Prudential%20
Standard%20GOI%201%20-%20Framework%20
for%20Governance%20and%20Operational%20
Standards%20for%20Insurers.pdf, accessed on 28
May 2017.

9
Prudential Standard GOI2 Governance of
Insurers Financial Services Board, published on
26 April 2017, available at https://www.fsb.co.za/
Departments/insurance/Documents/Prudential%20
Executive directors: Practices and remuneration trends report Standard%20GOI%202%20-%20Governance%20 9th edition: July 2017 11
of%20Insurers.pdf, accessed on 28 May 2017.
The remuneration committee must The remuneration paid to the heads of In defining an individuals performance, on Corporate Governance for South
develop and conduct regular reviews of control functions should not be linked to the remuneration committee should Africa, 2016 (King IV TM).13 These would
an appropriate remuneration policy for the financial performance of the insurer. ensure that both financial and non- make it compulsory for all JSE-listed
the insurer, monitor the implementation It also sets out broad guidelines for financial performance is considered. companies to adhere to the following:
and effectiveness of the policy in line the remuneration policies of insurers,
with the Prudential Standard, and make which are similar to those set out in The FSB also published a draft guidance The remuneration policy and the
annual recommendations to the board the Governance and Risk Management note on corporate culture, which implementation report must be tabled
of directors on the remuneration of the Framework for Insurers; however, it also states that as part of prudent business every year for separate non-binding
CEO, direct reports of the CEO, and states that an insurers remuneration management, an insurer should seek to advisory votes by the shareholders at
other persons whose activities may, in policy should be consistent with the establish a strong corporate culture of the annual general meeting.
the remuneration committees opinion, insurers business and risk management ethical behaviour and compliance with
The remuneration policy must
affect the financial soundness of the strategy (including risk management legal and regulatory requirements.12
record the measures that the board
insurer and any other person specified practices) and target corporate culture.
of directors of the company commits
by the Prudential Authority. The draft guidance note states that in
to take in the event that either
As with Board Notice 158, when monitoring and assessing its corporate
the remuneration policy or the
Members of the remuneration remuneration includes both fixed and culture, the board of directors of an
implementation report, or both, are
committee must be available to meet variable components, the remuneration insurer should recognise the many
voted against by 25% or more of the
with the Prudential Authority on policy should provide that: factors that can drive unethical
votes exercised.
request. behaviour. Furthermore, while incentive
The fixed portion represents a arrangements can be a major motive for 13
20170522 - Amendment Schedule Part 1 of
Prudential Standard GOI3 (Risk sufficiently high portion of the behaviour, both good and bad, they are 2016 JSE (2017), available at https://www.jse.
Management and Internal Controls total remuneration to avoid over not the only one. co.za/content/JSEAnnouncementItems/20170522-
Amendment%20Schedule%20Part%201%20
for Insurers) prescribes that an insurer dependence on the variable of%202016.pdf, accessed on 31 May 2017; and
must, at a minimum, have board- components; Amendments to JSE listing Institute of Directors Southern Africa King IV
Report on Corporate Governance for South Africa
approved policies that address certain requirements
The variable component is based (2016), available at https://c.ymcdn.com/sites/
material risks and risk areas, including iodsa.site-ym.com/resource/collection/684B68A7-
on a combination of assessment of The JSE published amendments to its B768-465C-8214-E3A007F15A5A/IoDSA King
for remuneration.11
the individual and the collective listing requirements in November 2016
IV_Report_-_WebVersion.pdf, accessed on 02
November 2016.
performance, such as the that calls on listed companies to adopt
performance of the business area and certain elements of the KingIV Report
11
Prudential Standard GOI 3 Risk Management
and Internal Controls for Insurers Financial
the overall results of the insurer; and
Services Board, 26 April 2017, available at https://
12
Guidance Note GOI GN 2.1 Corporate Culture
www.fsb.co.za/Departments/insurance/Documents/ The payment of the major part of a Financial Services Board, 26 April 2017, available
Prudential%20Standard%20GOI%203%20-%20 significant bonus, irrespective of the at https://www.fsb.co.za/Departments/insurance/
Risk%20Management%20and%20Internal%20 Documents/Guidance%20Note%20GOI%20
Controls%20for%20Insurers.pdf, accessed on 28
form in which it is to be paid, contains GN%202.1%20Corporate%20Culture.pdf,
May 2017. a flexible, deferred component that accessed on 28 May 2017.
considers the nature and time horizon
of the insurer.
In order to give effect to the In an explanatory note to the Therefore, the JSE opted to give more
minimum measures referred to in amendments,14 the JSE acknowledged content to the non-binding vote and Conclusion
KingIV TM, in the event that either that although some jurisdictions shareholder engagement in order to give
the remuneration policy or the have a binding vote on remuneration, effect to KingIV TM. The regulations
implementation report, or both, uncertainty and practical issues arise and trends above
are voted against by shareholders when a binding vote on remuneration is The amendments were finalised on illustrate that while
exercising 25% or more of the voting not passed, including: 19 May 2017.15 The JSE will only some jurisdictions
rights exercised, the issuer must in its require the application and disclosure place specific
voting results announcement (i.e. its How and when the remuneration will of the KingIV TM amendments on requirements on the composition
SENS announcement) provide for the be approved; any documents (circulars or annual and disclosure of an executives
following: reports) submitted to the JSE on or after remuneration package, these same
How remuneration will be
1October 2017.16 jurisdictions regulatory bodies
An invitation to dissenting treated during the period that the
shareholders to engage with the remuneration is not approved; and are also attempting to empower
Furthermore, the King IV TM amendments shareholders and encourage
issuer; and
What happens if the remuneration is will apply to all new listings from the companies to proactively engage
The manner and timing of such not approved at all. effective date (i.e. 19June 2017). The with their shareholders.
engagement. proposed amendments effectively
supersede the effective date of South Africa and the UK have also
14
JSE Explanatory Memorandum Part 1 of 2016 KingIV TM, which states that it only sought to align the remuneration
JSE (2016), available at https://www.jse.co.za/ applies to financial years beginning on packages of executives in insurance
content/JSEAnnouncementItems/20161101-
Explanatory%20Memorandum%20Part%201%20
or after 1 April 2017in other words, companies to each companys risk
of%202016.pdf, accessed on 05 June 2017. many companies would only need to horizon. The concepts of fairness
fully align their remuneration reporting as well as pay for performance
requirements to KingIV in their 2018 remain some of the most pressing
financial year. issues in the field of remuneration,
and investors as well as a broader

15
Board Notice 87 of 2017, GG 40847.
range of stakeholders expect to see

16
Amendments to the JSE Listings companies take tangible steps to
Requirements: Part 1 of 2016 JSE (2017), give effect to these principles.
available at https://www.jse.co.za/content/
JSEAnnouncementItems/20170522-JSE%20
Letter%20Implementation%20May%202017.pdf,
accessed on 05 June 2017.
Remuneration practices and
KingIV
Remuneration governance and disclosure

As discussed in the previous chapter, committees. In this chapter we consider
amendments to the JSEs listing some of the key aspects of remuneration
requirements now place a more disclosure to be considered by companies
onerous responsibility on remuneration and their remuneration committees.
What is fair and responsible?

King IV Principle 14 overall employee remuneration
Recommended practice 27: The in the organisation [bold is
governing body should approve our emphasis]
the policy that articulates
In the minds of many, executive pay has
and gives effect to its direction
become a symbol of wage inequality
on fair, responsible and (both within companies and when
transparent remuneration compared to the broader workforce in
[bold is our emphasis]. society), and governments have come
under pressure to level the playing
Recommended practice field by striking an appropriate balance
29: The companys between remuneration paid to executives
and the wage conditions for employees
remuneration policy should in lower-level jobs.
address organisation-wide
remuneration and include The table below examines how fair pay
provision for the following and the wage gap have been addressed
by governance bodies and regulators
specifically: a) Arrangements
in South Africa, the UK and the US,
towards ensuring that the respectively. We introduce a deeper
remuneration of executive discussion around the concept of fairness
management is fair and in remuneration in Chapter 8 regarding
responsible in the context of the economics and ethics of pay.
Remuneration practices and KingIV
Fair pay and the wage gap What does this mean for
South Africa UK US disclosure?
KingIV calls for companies to adopt The BEIS green paper on corporate The SECs final ruling on Pay Ratio The debate on the disclosure of wage
arrangements towards ensuring that governance reform provides various Disclosure18 requires each registrant to gaps is continuing. While publishing
the remuneration paid to members options for improving the transparency of disclose: pay ratios might be the right decision
of executive management is fair remuneration.
The median of the annual total for some companies, there is a danger
and responsible in the context of One of these is pay ratio reporting (i.e. compensation of all employees; that without specific guidance on
overall employee remuneration in the whether companies should publish ratios
organisation. The annual total compensation of its CEO; disclosure and meaningful discussion
comparing CEO pay to pay in the wider
and or interpretation thereof, it could lead
The Institute of Directors in Southern company workforce), and the proposed
Africa (IoDSA) published a position paper recommendation draws attention to the The ratio of these two amounts. to misleading comparisons across
US regulations around the disclosure of a companies.
on fair and responsible remuneration17 The identification of the median employee
which contained suggestions on what companys pay ratio. must include a cross-section of employees,
arrangements could be included. including various employee categories. A fair pay charter, with a requirement to
In terms of this option for increased
transparency, boards of companies would engage with employees, should create
Fairness includes the concept of These rules became effective for fiscal years
horizontal fairness (equal pay for work have to explain why the ratio is appropriate commencing on or after 1 January 2017. the right incentives for boards to address
of equal value) and vertical fairness given the performance of the business and the fairness question. Additional issues
(differences in total remuneration between rewards for the general workforce. that could be covered in such a charter
different job levels can be explained and It caveats, however, that a simple ratio of include the companys internal wage gap
justified on a consistent basis). CEO pay to the median salary in the company and Gini coefficient and the motivation
could produce misleading results. for setting pay at the current levels,
together with future plans to improve it.
Sources: King IV
IoDSA Remco forum paper on Fair and Responsible Remuneration (see reference below) It is, however, interesting to note that
SEC Ruling on Pay Ratio Disclosure (see reference below) in PwCs mid-season update of the first
40 FTSE 100 annual reports published
for companies with year ends from 30
September 2016 to 31 December 2016,
the following key trends regarding pay
ratio disclosures emerged:
17
Remuneration Committee Forum Position Paper 6 fair and responsible remuneration (2017), available at
Pay ratios: Of the 40 companies
http://c.ymcdn.com/sites/www.iodsa.co.za/resource/collection/57F28684-0FFA-4C46-9AD9-EBE3A3DFB101/ reviewed, only four disclosed such
IoDSA_Position_Paper_6-.pdf, accessed on 04 June 2017. pay ratios.
18
Securities and Exchange Commission release no. 34-74835, available at http://www.sec.gov/rules/
proposed/2015/34-74835.pdf, accessed on 30 April 2015.
Employee consultation: A number Exit payments Very few companies disclose the actual Should more not be done to protect
of companies disclosed that they policy applicable on termination in shareholders?
actively consult with or survey a Recommended practice 30: detail and in the event that the policy is
subset of employees or representative disclosed in detail, separation packages Is a non-binding vote enough, after the
union on matters of pay. Some All elements of remuneration are often negotiated outside the payment, in the past, of an exit payment
of these companies explain their offered by the Company as disclosed policy. that is unlikely to be repeated?
approach as helping to provide the well as the mix thereof should
remuneration committee with a be set out in the remuneration This begs the question of whether Also, what purpose would any
broader perspective, taking into companies should not be subject to engagement (as contained in the JSE s
policy, including payments on listings requirements) with shareholders
account the views of the average additional sanctions if exit payments
employee when making decisions. termination of office. are determined and paid outside of the have if the payment has been made?
parameters of the shareholder-endorsed
Cascade of incentives: Some Recommended practice 35 (c): Should remuneration committees not be
policy.
companies are increasingly disclosing
Separate disclosure of, and bound by what is disclosed in the policy
how the structure of incentives on exit payments?
reasons for, any payments Boards of directors, institutional
and benefits for executive directors
investors, governments and the media
cascades and compares to that for the made on termination of We would like to think that
are holding CEOs to a far higher level
wider employee population. employment or office. of accountability for ethical lapses than remuneration committees should
Gender equality disclosures: In in the past. Globally, CEO dismissals for approach this element of their
Exit payments made to directors ethical lapses increased from 3.9% of remuneration policies with greater
anticipation of the requirement to
are arguably the most contested all successions in 2007-2011 to 5.3% in care and would be supportive of
disclose their gender pay gap, some
remuneration matters and evoke much 2012-2016, a 36% increase.19 additional changes to the JSE s listings
companies have provided statistics
criticism from shareholders and the requirements imposing greater sanctions
and context around the demographics
public at large. Within the current We note this increased focus in the UK on companies who deviate from the
of their employee base, such as
KingIV framework, the policy relating too, where there is a draft government shareholder-endorsed policy on exit
disclosure of the gender split at each
to exit payments should be explained proposal that requires a company to payments.
level.
in part 2 (policy section) of the disclose contractual arrangements
remuneration report and be disclosed in relating to exit payments that limits
part 3 (implementation section), both executive termination provisions to no
of which are subject to a non-binding more than one years basic salary and
advisory vote. benefits.

19
Strategy& 2016 CEO Success study, available
at https://www.strategyand.pwc.com/
ceosuccess#nav, accessed on 12 June 2017.
Understanding and Fig. 1 Voting patterns on

One must take into account that some Voting trends among selected
top-40 companies are multinationals institutional investors
engaging shareholders remuneration policy/ with secondary listings on the JSE, and
remuneration report: JSE are subject to different remuneration Investor % for % for
The following section sets out certain top 40 companies regulatory frameworks. Others have 2016 2015
remuneration reporting trends for shareholders who are less concerned
companies listed on the JSE, in with the quality of the disclosure in the
Allan Gray (Pty) Ltd 58.2% 68.5%
particular: 12%
remuneration report. Coronation Fund 94.3% 92.9%
Managers
The voting patterns on the One should also take into account that
remuneration policies and Investec Asset 84.7% 87.8%
for the profile of shareholders differs, Management
remuneration reports of JSE top 40 with some companies having more
companies; active shareholders (individual and Stanlib Asset 89.7% 84.7%
88%
The remuneration voting patterns institutional) than others, and other Management Ltd
of South Africas major institutional companies having large shareholders. Public Investment 43.4% 44.2%
investors; and Corporation
against The remuneration report voting trends
An analysis of the most common by some of the largest shareholders in Old Mutual 66.9% 68.9%
reasons for voting down a companys South African companies have been
remuneration policy or remuneration analysed for the periods 1 January to 31 Source: Proxy Insights Limited
report. December 2015 and 2016, respectively.
The accompanying graphic sets out an
Year on year, half of these shareholders
It appears that many companies on the analysis of the most common reasons
have increased their no votes and we
JSE top 40 receive a high measure of why South African investors voted in
expect this trend to continue.
support from their shareholders on their favour of, or against, remuneration
remuneration policies or remuneration policies. This is based on publically
reports, although this is by no means available information.
decisive.
Many institutional investors do not
publically disclose their reasons for
voting against a remuneration policy
or report (even less so their reasons
for voting in favour of a remuneration
policy), opting to rather engage directly
with the company concerned regarding
their stance on the remuneration policy.
Rationale for voting decisions Where a company has made a Guaranteed pay levels should be
commitment to improve certain supported by a strong performance
elements of its remuneration management system.
framework, or levels of disclosure, it
After engagement with the company, issues with the Most of the major institutional
remuneration policy were adequately explained should honour this commitment in
investors state that increases awarded
Yes vote successive years.
to executives should not be out of
The company has committed to engage with the
shareholders over the performance conditions in the future line with general increases at the
The voting trends outlined above
company and the company should
should be juxtaposed with the voting
Guaranteed pay is benchmarked to the median, and STIs be sensitive to the internal wage gap
and LTIs are based on nancial performance conditions
policies of some of South Africas major
when setting such increases.
institutional investors, particularly
around their disclosure requirements. Bringing a remuneration policy in line
with the market should not be used
It is advisable to engage with to justify an increase in the size of the
shareholders in advance to gauge their overall package.
Insufcient disclosure
expectations regarding the substantive
Participation levels in benefits
forward-looking remuneration policy as
should be stated, and should not be
LTIs have no performance conditions well as the level of disclosure required
uncapped. Pension arrangements
from the company.
that differ from those of general
Remuneration policy is inconsistent with best practice staff should be substantiated. No
In addition, companies should
element of variable pay should be
understand and assess compliance
X pensionable.
Levels of remuneration are excessive against shareholder voting policies.
No vote
Some of the specific issues listed by There should be a proportionate
shareholders are: relationship between the size of an
executives base pay and short-term
Source: PwC analysis Many investors place an emphasis on incentive.
benchmarking and are of the view
What is clear from this is that shareholders seek a clear link between pay and that remuneration levels should The importance of a well-designed
performance, and that remuneration levels (and the underlying policies) should be in reflect both the short- and long- remuneration policy that strikes a
line with the market. term performance of the business, in balance between the interests of
isolation as well as relative to a peer shareholders and executives and
Institutional investors are less likely to disclose their reasons for voting in favour of a group of companies facing similar the principles of good governance is
remuneration policy. However, it is also clear that a company should engage with its economic conditions. of paramount importance and the
investors in good faith and explain how its remuneration framework is linked to the disclosure thereof is bound to become
companys overall business strategy. Excessive pay levels, when compared
more complex.
to comparator companies, will not be
supported.
Say on pay: A global perspective
United States
Say on pay is becoming
the norm globally for With say on pay in its fifth season in Change performance metrics in their Companies are going to these lengths to
the US, most companies have obtained annual and long-term performance make changes to their pay programmes
shareholders to express high levels of shareholder support. But programmes so as to employ more before shareholders raise these issues
their views on proxy some enterprises that have had positive efficient performance metrics to not in a say-on-pay vote for the following
votes at levels above 90% foresee this pay twice for the same metric; reasons:
filings and remuneration changing in the future. Many companies
Add a total shareholder return
reports that reveal have thus adopted ongoing shareholder
performance metric to the LTI
Over the past five years, there were
communication programmes. low levels of shareholder approval
compensation paid to schemes;
at some large companies that were
directors. Shareholders Building a close relationship between Change from three one-year typically between 40% and 70%.
a company and its largest shareholders performance periods to one Frequent changes made in reaction to
hold voting rights to can help address the issues before they three-year performance period low levels of support on say-on-pay
either accept or reject the cause problems. Besides meeting with for a performance-based equity votes included:
shareholders, companies have worked programme; and
policies explained. Adding performance share units;
hard at enhancing the text in the
Adopt clawback mechanisms for their
compensation discussion and analysis Making changes to the LTI pay mix;
annual and LTI grants.
In this chapter we section of their annual proxy statements
Adding clawback mechanisms;
to provide more explanation and
summarise how say on rationale on pay decisions, such as pay- Adopting double-trigger equity
pay is administered in for-performance and pay metrics, to add vesting;
more depth to their descriptions. During Improving performance metrics;
selected countries. the current proxy season, companies
have taken one or more of the following Adding absolute governors on
steps in response to shareholder relative TSR plans;
concerns: Eliminating tax gross-ups; and
Recommend that a majority of Eliminating perquisites.
shareholders approve a proxy access
proposal submitted by shareholders,
not by management;
In a few cases, the CEO was replaced To date, annual say-on-pay voting United Kingdom
or appointed as executive chairperson. has been the choice of the majority of
Rather than make drastic changes, shareholders. Research among Russell Executive pay absorbed more column The problem is not that executive pay
companies have gained from the 3000 Index companies suggests that this inches in 2016 than for several years has changed for the worse over the last
experiences of other businesses that frequency be maintained: and led Theresa May to announce a year. On the contrary, the disclosure
received low approval levels, and have crackdown in one of her first policy of bonus targets has improved, and
concluded that they need to become Say-on-frequency vote results: proposals as she launched her bid to more companies have adopted holding
more proactive in such situations. Russell 3000 Index companies lead the Conservative Party. periods on LTIPs, taking them to a total
five-year vesting period.
US companies began casting say-on-pay Period average, 2011-2016 The Government is now seriously
and say-on-frequency votes in 2011, considering a range of options covering Instead, what weve seen is a growing
and the 2017 proxy season heralds % in Number of impatience with the status quo.
new voting powers for shareholders,
the new six-year cycle where, for the favour responses
better disclosure (including of pay Executive pay has become a symbol of
second year, shareholders will be asked Annual vote 80.3% 2 091 ratios between CEOs and the wider an out-of-touch elite, an issue given
what the frequency of say-on-pay votes workforce), simplified payment political urgency by the result of the
Biennial vote 0.7% 17
should be. The expectation is that most plans, and employee and consumer Brexit referendum.
companies will agree to an annual say- Triennial vote 19.0% 494 representation on company boards.
on-pay vote. More regulation seems inevitable. The latest AGM season and pay round
Total 100% 2 602 were in fact much less dramatic than the
The frequency aspect may not be the But analysis of the data from PwC UKs headlines or political reaction in the UK
best option, since it addresses a short- Source: ISS Corporate Solutions Voting Analytics suggests. But there are still lessons to be
using Russell 3000 companies
mid-season FTSE 100 update, following
term view, whereas a triennial vote the AGM season, does not suggest a learned and own goals to be avoided for
would be less likely to be influenced system out of control. Among FTSE 100 the future. All of which will be essential
Since the US proxy vote is now deeply
by short-term movements in directors companies, the median salary increase on the long hard road to rebuilding trust
embedded into shareholder culture,
remuneration. was 2.2%, and around one-third of in executive pay.
what shareholders decide in the US
is considered the benchmark for best CEOs had their pay frozen.
Under the Dodd-Frank Wall Street The looming reality for 2017 reflects
practice.
Reform and Consumer Protection Act, Bonus payments were up by 3%, but a different mood from shareholders.
the say-on-frequency vote is required in total compensation was down by 3%. Executive directors pay is clearly under
What happens in the US regarding SEC
the first year that this applies, and then And three-quarters of companies a much brighter spotlight, and investors
and stock exchange requirements is
is up for revision at least once every six received votes for their remuneration predict a very rough AGM season in
invariably followed by other countries
calendar years thereafter. reports of more than 90%. 2017.
where regulated company-shareholder
communication is the norm.
The say-on-pay frequency vote allows
shareholders to indicate a preference
for one-, two-, or three-year periods
between say-on-pay votes.
Listed companies in the FTSE 100 are There are 14 Green Paper questions, between the two bodies, to advocate
clearly running scared, with some with six relating to executive pay. The fairer and more ethical approaches to
of them proposing to freeze CEO details of the proposals are set out on pay and reward.22
remuneration for three years. These page 8.
are early blows by investors before the Their recommendations include:
2017 AGM season gets well underway. Some of the UKs largest investors
Leading the revolt are UK pension funds have revealed support for government All publicly listed companies should
and other institutional investors. proposals designed to curb high be required to publish the ratio
executive pay in the latest pushback between the pay of their CEO and
The BEIS20 tabled a Green Paper in against the widening income gap median pay in their organisation;
November 2016; which states: between bosses and workers.
All publicly listed companies should
be required to have at least one
The aim of this Green paper Old Mutual Global Investors; Fidelity
employee representative on their
is to consider what changes International; the Pensions and Lifetime
remuneration committee;
Savings Association, which has a
might be appropriate in the membership of over 1300 pension All publicly listed companies should
corporate governance regime schemes; and the Confederation of be required to establish a stand-
to help ensure that we have British Industry have unilaterally alone human capital development
an economy that works for indicated broad support, while other subcommittee chaired by the HR
areas mentioned included more robust director, with the same standing as all
everyone.21
consequences for companies whose board subcommittees; and
directors remuneration is not approved
The Government should set voluntary
20
BEIS: The Department for Business, Energy and by shareholders and also implementing
Industrial Strategy is a UK government department human capital (workforce) reporting
an annual binding vote on pay.
which was created by Theresa May on 14 July standards to encourage all publicly
2016 following her appointment as Prime Minister,
listed organisations to provide better
as a result of a merger between the Department of The High Pay Centre, an independent
Energy and Climate Change and the Department information on how they invest in,
for Business, Innovation and Skills. non-party think tank focused on
lead, and manage their workforce for
21
BEIS Corporate Governance Reform: Green pay at the top of the income scale,
the long term.
Paper (2016), available at https://www.gov.uk/ collaborated with the Chartered
government/uploads/system/uploads/attachment_
Institute of Personnel and Development
data/file/584013/corporate-governance-reform- This obvious backlash spurs blue-chip
green-paper.pdf, accessed on 04 June 2017. (CIPD) to submit a joint response to the
companies to rethink their pay plans in
Green Paper consultation, marking the
the UK.
commencement of a formal relationship
22
http://highpaycentre.org/files/CIPD_and_HPC_
response_to_BEIS_Green_Paper_on_Corporate_
Governance_%281%29.pdf
Australia Belgium
In Australia, the two-strike law is to stand for re-election, except the CEO, who is permitted to continue to run the Listed companies in Belgium must deal
designed to hold directors accountable company. This reform is intended to provide an additional level of accountability for with an ever-increasing number of rules
for executive salaries and bonuses. The directors, with increased transparency.23 and regulations. These regulations are
entire company board can face re- either legislative initiatives taken at the
election if 25% or more of shareholders The Australian AGM season in 2016 saw an increased number of companies receiving European or national level or circulars
disagree with how much executives are strikes against remuneration reports. In many cases, there was just cause against issued by the regulatory authorities.
being paid. practices and decisions elsewhere in the company, and the vote may have been used
to express broader dissatisfaction with company performance. Here, just as in many The Belgian legal rules relating to
The law is an amendment to the other parts of the world, shareholders are objecting to rewarding directors for failure. compensation are straightforward. The
Corporations Act, which came into effect companys articles of association (or, if
in July 2011. The first strike occurs Australia: The number of strikes is increasing they are silent, the general meeting of
when the companys remuneration shareholders) determine both whether
report receives a no vote of 25% or 2015 2016 the directors shall be remunerated24 and
more at the AGM. This is recorded. ASX 100 % receiving a strike 4% 8%
if they are to be paid the remuneration
package for their services as a board
The second strike comes into play when Average % vote against the remuneration report 7% 8% member.25
the companys subsequent published
ASX 200 % receiving a strike 5% 8%
remuneration report also receives a no Alternatively, shareholders at the
vote of 25% or more. Average % vote against the remuneration report 6% 7% general meeting can indirectly decide
to pay the directors by approving
When both strikes have taken place, Source: PwC Australia 10 minutes on2016 Annual General Meeting season in whom do we trust? the companys accounts in which the
shareholders all vote at the same AGM December 2016
remuneration is included (as a cost).26
to determine whether all the directors
need to stand for re-election. This 24
The Belgian director can be remunerated, but
determination is known as a spill 23
Source: Federal Government of Australia. does not have to be. Code des Societes [C.SOC]
resolution if passed with 50% or more [Companies Code] art. 517 (Belg.).
eligible votes cast. Within 90 days a 25
D. Willermain, Le statut de ladministrateur de
socits anonymes: principes, questions et
spill meeting must take place where rflexions, 2008 Revue des Socits 207, 236.
all directors involved will be required 26
Id. at 236 n.95.
The general meeting of shareholders Previously, most corporate boards did France
decision about the remuneration of the little to ensure that shareholders had
directors only relates to the total amount much say on executive remuneration Like many other countries, France has a As a side issue, the French Government
granted to the board of directors. The policies. For example, in 2011, the mandatory comply or explain corporate has introduced a new tax regime for
board of directors decides how this total last year before the new say-on-pay governance code, called the AFEP-Medef the rich, indirectly addressing what
compensation package will be divided law came into operation, only 40% corporate governance code for listed are considered excessive remuneration
between the directors.27 of companies had the total gross companies. packages.33 In a controversial move,
remuneration package of the board for state-controlled enterprises,
The Belgian companies code now of directors, or of the newly elected Companies are free to adopt this code including large listed companies like
also requires shareholder approval, directors, explicitly approved by the and its principles, but are not required EDF and Aeroports de Paris, limits on
or a facilitating article of association, general shareholders meeting. to do so if they explain why they do the remuneration of members of the
to deviate from a minimum vesting not comply31. The code emphasises the board have been introducedcurrently
period for shares and share-based Once the new say-on-pay law went into importance of full disclosure of the 450000.34
remuneration. effect, over 90% of the companies put remuneration packages of executive
the remuneration report on the agenda offices and board members. An analysis of minutes from their
Shares must not be vested earlier than of the general meeting of shareholders.29 general meetings found that 53% of
three years after they are granted, while The introduction of a comply or CAC-40 companies sought shareholders
share options or other share-based Remuneration reports received high explain requirement in AFEP-Medef has approval of directors remuneration
benefits must not be exercisable earlier approval ratings from shareholders with temporarily avoided the introduction every third year.35 In the remaining
than three years after they are granted.28 a mean approval rating of 90.6%. of French statutory say-on-pay companies, the frequency of rulings was
requirements. Reuters reports that the indeterminable. There does not appear
The new Belgian Corporate Governance The larger Belgian companies listed Government supports the comply or to be any significant opposition to the
code, with both a mandatory comply or on Euronext showed an even higher explain rule.32 remuneration paid to French board
explain requirement and a mandatory approval rate of 95.3%. In both members.
requirement to provide a remuneration instances, the median approval rates
report, greatly increases the amount were even higher.30
31
Gerard Charreaux & Peter Wirtz, Corporate 33
French law now imposes a tax of 75% that
of information disclosed concerning Governance in France 3 (Universit de Bourgogne
companies have to pay for remuneration packages
Working Paper no. 1070201, 2007), available at
the remuneration of directors and
29
The other companies did not comply with the law http://www.virtusinterpress.org/additional_files/ surpassing 1 million. Loi 2013-1278 du 29
executives as well as corporate (Christoph Van der Elst, Shareholders as Stewards: book_corp_govern/sample_chapter04.pdf. dcembre 2013 de finances pour 2014 [Law 2013-
Evidence from Belgian General Meetings 16 (Fin. 1278 of December 29, 2013 on the financing of
remuneration practices. Law Inst., Univ. of Ghent, Working Paper No.

32
Leila Abboud, Ad Agency Publicis Brings Say on 2014], J.O., Dec. 30, 2013, p. 21829 available at
Pay to France, REUTERS, (May 29, 2013, 2:08 AM) http://www.legifrance.gouv.fr.
2013-05, 2013)), available at http://papers.ssrn.
http://uk.reuters.com/article/2013/05/29/publicis-
com/sol3/papers.cfm?abstract_id=2270938. 34
Loi 2012-915 du 26 juillet 2012 relatif au contrle
pay-idUKL5N0EA2AG20130529?feed Type=RSS

30
PwC research, 2012-2016 &feedName=rbssFinancialServicesAndRealEsta de lEtat sur les rmunrations des dirigeants
teNews. We presume that the new edition of the dentreprises publiques [Decree 2012-915 of
27
Id. at 237.
French corporate governance code with say on July 26, 2012 on the Government Control of
28
C.SOC art. 520ter (Belg.). This provision is not Washington University the Remuneration of the
applicable if the variable part of the remuneration is pay convinced the French Government thatat
the momentno legislative action is required and Directors of Government Controlled Companies],
less than 25% of total remuneration. J.O., July 27, 2012, p.12283.
that the mandatory Comply or Explain regime of
the code with respect to say on pay of individual 35
37 large companies are in the sample. One
directors remuneration is sufficient. company is registered in Belgium, the other in
Executive directors: Practices and remuneration trends report the Netherlands. Those three companies
9th edition: July 2017were 23
excluded from the list.
Germany
As early as 1937, the German Stock general elections. remuneration policies.
Corporation Act required the
supervisory board to ensure that the Regarding say on pay, while not In fact, there have been more medium-
compensation of the management was mandatory, all DAX companies have had and long-term incentive schemes.38 A
reasonable, and reflected both the their management board remuneration 2011 OECD study found that German
duties of the management board as system approved at least once at the executive packages have a higher level
well as the financial condition of the AGM since 2010, and many of these of variable remuneration than those
company. This was applied rigorously.36 companies have an annual approval on in the United Kingdom.39 This has
the agenda. resulted in more generous remuneration
Today, the development of the packages, which are viewed to be less
remuneration package of German German shareholders are generally transparent than previously.
management is relatively well mapped. very conservative in their approach to
German executive compensation directors remuneration, and the latest The financial press in Germany
packages have grown, especially among figures available show an approval level has reported that the low level of
the 30 largest German public companies of more than 95% among company shareholder opposition is the result of
listed on the DAX, which more than shareholders.37 private consultation between executive
doubled from an average of less than directors and institutional investors.40
1.2 million in 2007 to more than 3.3 Visible influence of German
million in 2015. There was a slight shareholders votes on management
38
AktG, Sept. 6, 1965, BGBL I, as amended 2016,
downswing in 2008-2009. remuneration appears to be modest. 87, para. 1.
As mentioned, say on pay is optional, OECD (2011), Board Practices: Incentives
39
and Governing Risks, Corporate

Executive salaries are now more but widely practised. In the event that Governance, OECD Publishing. http://dx.doi.
closely tied to company success, shareholder opposition to remuneration org/10.1787/9789264113534-en
mainly linking increases to share price was the result of a shareholder vote, and
40
Peter Wilke & Katrin Schmid, Entwicklung der
Vorstandsvergutung 2011 in den DAX-30-
and other factors, especially product reviewing year-on-year financial reports, Unternehmen 46 (Hans Bckler Stiftung Working
environmental risk. The Merkel companies do not reflect a change in the Paper No. 269, 2012).
Government has made it known that
excessive executive pay will be high on 37
This data is based on calculations of reported
the agenda leading up to the September approval rates in DSW, Studie zur Vergtung der
Vorstnde in den DAX- und MDAX-Unternehmen
im Geschftsjahr 2015
36
Brigitte Haar, Executive Compensation under
German Corporate Law: Reasonableness,
Managerial Incentives and Sustainability in Order
to Enhance Optimal Contracting and to Limit
Managerial Power, in Research Handbook on
Executive Pay, supra note 2, at 486, 490.
Sweden The Netherlands

Unlike France and Belgium, Swedish In the event that the exact amount In the Netherlands, the AGM of
companies say on pay is determined cannot be aggregated, there must be the shareholders must approve the
for each individual director (including guidelines that contain information on company remuneration policy, and any
the supervisory board) at the AGM of the nature of the remuneration as well amendments to this policy since the last
shareholders. as the estimated cost to the company. meeting.41
Traditionally, this is done to ensure that In the companys annual report, This has been the case since 2005,
individual directors remuneration is disclosure is necessary on the and using this method of voting,
similar, and to avoid wide disparities information that has been approved shareholders are able to exert
within the company. by the board, but is not yet payable. substantial influence on a listed
There are individual and specific companys remuneration policy.
In Sweden, say-on-pay votes at the circumstances in terms of the Swedish
shareholders AGM is a binding vote Companies Act. The minutes of the meetings of listed
for or against the board of directors companies reveal that corporate
proposed remuneration, including that remuneration policies, as well as
of the CEO. Shareholders at the AGM remuneration of individual directors,
must vote annually on guidelines to be are regularly and heavily debated.
applied in the accounting period for Actual rejections, however, appear to be
directors remuneration. rare.
The Swedish guidelines are laid out

in the Swedish Companies Act. The
guidelines must be forward-looking,
but limited to the period until the
next AGM. Salary and all other types
of compensation must be equally
addressed, including granting and
vesting of options and any future
payments in equity.
41
Corporate Governance Code Monitoring Comm.,
supra note 289, at II.2.10
A new model for executive pay
Are the days of long-term incentives numbered?

The UK Government is currently focused The Committees conclusion regarding Further, the Committee recommends
on strengthening public trust in UK long-term incentive plans (LTIPs) in that vesting of such restricted awards
businesses. In April 2017, in the wake of their current form (i.e. performance- be over a longer term of five or more
recent corporate governance scandals, based LTIs which vest after a three-year years, and that the use of such awards
including those at BHS and Sports performance- period) is that they should be combined with a decrease in use of
Direct, the Business, Innovation and be phased out. short-term performance-related cash
Skills Parliamentary Select Committee bonuses, with such bonuses being
(now the Business Energy and However, the Committee maintains aligned, where possible, to wider
Industrial Strategy Parliamentary Select the view that best practice is that pay company objectives or corporate
Committee) published the results of an incentives should continue to focus on governance responsibilities.
inquiry into corporate governance, with the long term, with incentive-related
a focus on, inter alia, executive pay and pay being valued by investors as a In terms of short-term incentives, the
worker representation. meaningful method of promoting long- Committee stated a preference for clear
term decision-making. criteria and genuine stretch, resulting in
In addition to this inquiry, in November bonuses operating as actual incentives.
2016, the Department for Business, The Committee stated a preference
Energy & Industrial Strategy (BEIS) for this link to be provided simply, While it remains to be seen which of the
published a Green Paper intended through a portion of total remuneration Committees recommendations will be
to encourage debate and discussion being delivered in shares, which are enacted into legislation in the UK, South
on corporate governance reform to restrictedmeaning they can only be Africa can take heed of the extensive
allow the Government to efficiently sold after certain periods of time. research and evidence produced by the
consider whether any changes are inquiry.
necessary. It is currently unclear what The number of shares vesting would
recommendations will be adopted by be determined as a portion of the It should not be necessary to legislate,
the UK Government. The Green Paper total remuneration package, with but rather executives should be
is discussed in the Global Regulatory the ultimate value being determined encouraged to hold their shares earned
Update chapter. according to share price at the time of through these plans. There is sufficient
vesting. In the South African market, evidence in the market that confirms
In this chapter we examine the impact these awards are termed restricted that there is a direct correlation between
these developments may have on shares, and can be delivered through successful companies and executives
incentive design in South Africa. a conditional share plan or forfeitable holding shares in the company.
share plan.
The purpose of an LTIP should be Performance on grant LTI: Key design decisions
revisited and possibly one could
conclude that if the objective is not to
2
2. Quantum
deliver shares to the executives to hold
The clear expectation from investors
post vesting, there should not be an LTIP Award based Subject to malus/
on pre-grant clawback over is that a move to a model based on
at all. In support of this objective, we 3 4
performance vesting period pre-grant performance criteria should
take a look at an alternative model that criteria LTI
1 result in a lower maximum quantum.
could be considered.
Vesting period Subsequent In exchange for greater certainty,
5
holding period executives should be prepared to
An alternative long-term Disclosure
accept less reward. As supported by
Bonus
incentive model our research on the psychology of
Salary
incentives, we also find this to be the
In our 2013 edition of the Executive case in practice.
0 +1 +2 +3 +4 +5 +6 +7 +8 +9 Retirement
directors remuneration practices
and trends report, we discussed an The trade-off in each case will depend
1 Pre-grant allocation method 4 Holding requirement
upon the plan design, but a discount
alternative model for LTIs, which
was based on a pre-grant allocation 2 Quantum 5 Disclosure of 25% to 33% in face value may
methodology. be appropriate. If no performance
3 Vesting period and conditions conditions are applied to the stock
The greater simplicity of this alternative award on grant, then the discount might
model, combined with the transparency be 50% or more.
1. The pre-grant allocation method
of its value, means that the irrational
discount often applied by executives to Three main approaches are being Under this model, a share award is 3. Longer vesting period
deferred long-term incentive awards considered by companies for deciding set at a level to deliver an appropriate
There is an increasing consensus among
(which can be a discount of two- to the size of the LTI to be awarded: competitive package, which then adjusts
investors that three years is not long
three-thirds) falls away. up or down over time with performance
enough for the consequences of senior
Performance scorecard; as the shares (which are subject to
management decisions to play out fully
deferral and holding requirements)
Fixed grant value; and and that some form of performance
move in value.
accountability should be retained for a
Fixed grant number.
five-year period.
A further performance ratchet can be
Some organisations have already been introduced by awarding a fixed number
Although this may not necessarily mean
exploring the idea for some time with of shares, set for perhaps three to five
five-year performance periods, it does
the performance linkage for the most years, so that the grant value moves in
mean that exposure to share price, and
senior people being derived purely line with the share price. So a fall in
possibly clawback, should extend for
through the share price. share price automatically scales back
five years.
future compensation as well as awards
Executive directors: Practices and remuneration trends report already made. 9th edition: July 2017 27
4. Holding requirements 5. Disclosure Extending the model This is aligned with the spirit of the
UKs findings in terms of long-term
The objective of this model is to create One concern of shareholders is that the For executive directors, it could be incentives, where concern about overall
large shareholdings, held for an performance-on-grant model places argued that there is no need for both levels of executive pay have driven a
appropriate period of accountability. significant discretion in the hands of bonuses and LTIs under the new model, move away from traditional pay-for-
This is the basis of alignment with remuneration committees. particularly if the LTI is measured on an performance LTIs.
performance and with shareholders. annual scorecard.
Shareholders continue to feel that
This aligns with our observation in
Hold-to-retirement has become a discretion has not always been exercised One radical approach is to remove the 2013 report that investors regard
popular way of referring to this. Under appropriately. As a result, investors the bonus component entirely and a reduction in overall quantum as an
this model, all vested shares, or a continue to demand a high degree of award all incentives through the new important part of the trade for greater
portion thereof, have to be held until disclosure surrounding discretionand LTI structure. Alternatively, executive simplicity and certainty for executives.
the individual leaves the business. this will particularly be the case where performance bonuses could be replaced
However, this approach has some noted LTIs are moved to a performance-on- by a fixed award of shares vesting over There has been historical resistance
disadvantages. grant model. These disclosures should five years, so that the share award has by institutional investors to awards
be tied in with the higher standard of both fixed and performance-on-grant without prospective conditions and,
We believe that an appropriate way disclosure introduced with KingIV TM. components. accordingly, any changes to traditional
to encourage shareholding, which is
models should be undertaken only in
gaining increasing support in South With this degree of disclosure, the In summary the context of extensive shareholder
Africa, is the adoption of a strictly alternative model may actually facilitate
When this model was first put forward, engagement and dialogue.
enforced shareholding requirement. a very open dialogue with shareholders
about how the remuneration committee there was a clear expectation from
investors that a move to a model based However, where proposed changes
Under this regime, the executive would has assessed performance. This can
on pre-grant performance criteria take into account all relevant factors
not be allowed to sell any shares until result in sufficiently transparent
should result in a lower maximum that may influence design, including
the shareholding requirement has been disclosure about the link between pay
quantum. the historical success of pay-for-
met, and the requirement would be and performance. performance incentives, shareholders
substantially higher than is currently
should be supportive of the new regime.
typicalperhaps four to six times the However, remuneration committees will
base salary. need to earn the necessary trust before
adopting a model that gives them more
control.
Case study
A major theme emerging from the UK inquiry into corporate governance is that LTIs are not one-size-fits-all.
LTIs should be simple and transparent in their design, incentivise over the long term, and not cause excessive shareholder
dilution. Appropriate governance mechanisms, which are a fit for the particular company, should be incorporated and other
factors unique to each company and its shareholders should be given due consideration.
A mining company recently sought, after thorough engagement with its shareholders, to introduce a unique deferred share
plan, which incorporates many of the recommendations set out in the Committees findings. This was received positively by
shareholders, and approved with a 97% vote.
Key features of the plan

It is a simplified plan that replaces all current short- and long-term components with a single structure.
It provides a single performance scorecard embracing both short- (annual) and longer-term objectives. Performance
measures are based on the current year and trailing three-year periods.
Payment is made through a combination of annual cash bonuses and deferred share grants vesting over five years.
A portion of the incentive under the new proposed plan will be payable in cash, with the cash-settled portion lower in
value than the share-settled portion. The balance of the incentive will be awarded as deferred shares (conditional shares
with dividend equivalents) vesting equally over five years for participating executives.
Unique features:
Reduced participation in the share incentive, with consequently less dilution.

Introduction of clawback on vested awards.
Minimum shareholding requirements for executives are applied.
The plan will reduce the impact of uncontrollable factors such as the commodity price and currency fluctuations.
CEO succession in a digital
world
Contrary to the previous industrial Digitization has

Leaders have an essential revolutions, this one is evolving at an
exponential rather than linear pace. changed all sectors of
role to play in ensuring New technology begets new and ever the economy, albeit in
an organisations more capable technology. It involves
different ways.
the transformation of entire systems,
success and productivity across and within countries, companies, Since 2007, our Digital IQ research has
and the performance industrial sectors and society as a whole. examined how far organisations have 52%
of its employees. In The next wave of economic dislocation
come and whats needed to unlock of the 2 216 executives in
value from the next generation of 32 countries surveyed
the digital model of will come from the relentless pace of
digital technologies. The purpose of
automation that makes many good rated their organisations
the Fourth Industrial lower- and middle-class jobs obsolete.
the survey has been to determine how as having a strong Digital
organisations can maximise and profit
Revolution (4IR), from technology investment.
IQ.
The digital age thus demands a
leaders increasingly new business model and equally a
The world was a simpler place when
need to be technocrats commensurate new remuneration
PwC first set out to measure Digital IQ
model.
who understand the a decade ago. Digital was just another
name for IT. The CIO was not generally
new business models regarded as a strategic leader, and
and leadership qualities putting new technologies to work was a
relatively straightforward job.
needed to flourish
in a dynamic digital
environment.
CEO succession in a digital world
Today, the scope and scale of digital- Digitisation today touches almost every
82% driven change have grown immensely,
and organisations have invested a lot of
aspect of human endeavour. City traffic,
transportation, security, production
42%
of top performing of executives see the
time and money to keep up. machinery, farming to mention a few,
companies, 62% with are all digitised to a lesser or greater
Internet of Things as
revenues of $1 billion or Yet company leaders are no better extent. disruptive to the business
greater, pay attention to equipped to handle the changes coming model.
the human experience their way than they were in 2007. This paradigm shift in how businesses
surrounding digital tech. Organisations arent so much falling will operate in the future will clearly
behind as struggling to keep up with change the strategic management ability
accelerating standards. of future CEOs.
How, then, can you consistently unlock Todays business environment cannot
value from digital investments in a settle for incremental improvement.
rapidly advancing world? The answer is Change has already happened and
at once simple and infinitely complex: instead of periodically reviewing
Focus on the human experience. Rethink performance in line with previous
how you define and deliver digital dispensations, the bar has been raised
initiatives, consider employee and and CEOs are required to have the
customer interactions at every step of knowledge necessary to tackle the
the way, invest in training and culture, challenges of today. For example,
and much more. KingIV requires that the governing
body of an organisation should govern
technology and information in a way
that supports the organisation setting
and achieving its strategic objectives.
The standard questions posed when

deciding on the succession of the CEO
have undergone a paradigm shift to
match those of the 4IR.
CEOs in the digital world Rethinking the business

model is a challenge of
Effective CEOs will go to extraordinary lengths for causes they believe in to shape a
note for CEOs
Make digital powerful transformation story so as to create and reinforce their commitment to digital We have all become accustomed to
transformation change. The ultimate impact of the story depends on the CEOs ability to calm the disruption. In industry after industry,
meaningful. threat of the 4IR, to engage technology openly, and to reward successes as they we see that those who cling to old
emerge. business models lose ground. The 4IR
will accelerate this sequence, especially
in manufacturing, by reducing costs
Successful CEOs typically embark on their transformation journey with the weapon of and improving efficiency on a broad
Recalibrate digital technical knowledge. Their know-how encourages employees to support and scale. If a company is falling into the
desired engage in change. trap of thinking that it can be profitable
mindsets and following its traditional business model,
behaviour. it risks losing out to more flexible
competitors.
Build Harness the transformative power of new technology. The CEOs must make CEOs are not in the same industry
robust strategic decisions about who has the ability and motivation to accept the that they were in before; soon, their
knowledge- challenges and drive change. industry may not even exist. Their
path to profitability is different. Their
based top
opportunities for raising capital have
teams. changed. Their circumstances are
probably different from those of any
There is no substitute for the CEO who gets personally involved when signicant other company, so they need to look
Relentlessly nancial and symbolic value is threatened by technological risk. at them afresh, without relying on an
industry playbook, and rethink their
pursue digital
business models accordingly.
impact.
Finally, in a world of robotics and
automation, its important not to fall
into the trap of putting machines before
people. If people are shut outof jobs,
Source: http://archive.constantcontact.com/fs004/1101121492994/archive/1101554243444.html/Gov.com EPIC Change: How to Lead Change in the Global Age by creative opportunities, income, and
Timothy R. Clark ISBN 978-0-470-18255-0: https://www.loc.gov/Accessed 1 June 2017: Chart PwC in Microsoft SmartArt
customer satisfactionthen embracing
technology will backfire.
As the next revolution advances, it A guide to leading the next Industrial Revolution
is imperative to keep working on the
understanding of how people are It remains to be seen how, and the
interacting not just with the technology 1 2 3 4 5 extent to which, digitisation will
but also with its consequences, such disrupt the composition of traditional
Rethink your Build your Design for Raise your Innovate
as the issues of transparency, trust and business strategy customers technological rapidly and
financial performance metrics that
privacy. model around acumen openly drive the behaviours and competencies
platforms of CEOs; as well as its impact on short-
Business, in particular, will thrive and long-term incentive structures
in this new world only if its leaders (which, as we have already explored in
understand the place of human values. this publication, are already changing
So, enterprises need to be set up to rapidly).
foster better connections among people,
to encourage humane behaviour, and Currently, shareholders still favour
to build the capabilities that overcome 6 7 8 9 10 predominantly financial performance
technological isolation. metrics, with a gradual increase in
Learn more Adopt Focus on Be Put humanity demands for sustainability and fairness
from your innovative purpose, not trustworthy before to permeate through a companys
data nancing products with data machines
models
overall remuneration framework. More
detail around shareholder sentiments
concerning executive pay is set out in
39% the King IV TM-related chapter above.
of CEOs use data analytics In time, however, we anticipate
to nd, develop and keep that CEOs will (in addition to these
people. considerations) also be selected
Source: Strategy&, 10 Principles for Leading the Next Industrial Revolution, https://www.strategy-business.
com/article/10-Principles-for-Leading-the-Next-Industrial-Revolution and measured on their ability to
navigate their companies through a
rapidly changing global technological
Digitisation and reward environment; and this will include
developing appropriate incentivisation
PwCs 20th CEO Survey42 found that 77% of CEOs are concerned that key skills and retention strategies for their key
shortages could impair their companys growth. That said, the percentage of CEOs talent pool.
who agree that their companies use technology to hire, train and retain people, or
who are exploring the future impact of technology on their people or on the HR
function itself, is fairly low.
42
Available at www.ceosurvey.pwc , accessed on 15 June 2017.
The economics and ethics of
pay
addressing the plight of their most Fairness is defined in KingIV as: The Forum notes, however, that
Since the introduction junior workers. We also introduce the perceptions of fairness by external
PwC global Ethics of Incentives survey, the equitable and stakeholders are driven by the absolute
of this topic in the whose results will be released soon. levels of pay and not by their relativity to
reasonable treatment of the
2014 edition of this sources of value creation,
peers. It also stresses that remuneration
KingIV and fair pay decisions are responsible when funded
publication, the issue including relationship capital, [by] and linked to the creation of value
has gained significant The King IV43 Report issued in late as portrayed by the legitimate over the long term. This resonates with
and reasonable needs, our understanding of the position of
momentum in the 2016 provides clear guidance to the
most institutional investors, who are
boards of companies to focus and report interests and expectations of
popular discourse, with on the issue of fair and responsible material stakeholders of the
more focused on the alignment of pay
with performance.
politicians, economists remuneration.
organisation.
and regulators getting Principle 14 of King IV TM In our paper in the 2017 edition of the
It was noted at the World Economic African Journal of Reward, we noted
increasingly involved states that the governing body
Forum45 in March 2017 that Millions the progress on establishing a minimum
should ensure that the organisation
locally and globally. remunerates fairly, responsibly and
have been lifted out of poverty, yet wage in South Africa and discussed
rising inequality is feeding a growing approaches to quantifying the wage gap
transparently so as to promote the
disillusionment with globalisation. and the basis for establishing an ethical
There is a significant consensus achievement of strategic objectives and
that inequality, unemployment and positive outcomes in the short, medium framework for remuneration by the
The IoDSA Remuneration Committee remuneration committee in consultation
poverty should be national priorities, and long term.44 Forums recent paper on fair and
although the means of addressing with the social and ethics committee
responsible remuneration46 discusses for consideration and adoption by the
these challenges remains under intense Principle 3 (14) states that the
the burning question of how much is board.47
debate. governing body should oversee and
enough? when considering executive
monitor, on an ongoing basis, the
pay, concluding that the answer to this
In this edition we provide an update of management of an ethical workplace, Finding the Balance Towards an Ethical
question lies between the extremes of
47
the new KingIV requirements on fair including employment equity and fair Framework for Remuneration (Hopkins, Crous,
not less than the market and not more Botha), April 2017 in the African Journal of Reward,
pay, trends in executive remuneration, remuneration.
than the organisation can afford. Ed. 2.
the latest estimate of the Gini co-
efficient of the employed and the pay
43
The King IVTM Report on Corporate Governance
for South Africa 2016, The Institute of Directors of
45
World Economic Forum Meeting, March 2017,
ratio, and discuss how companies are Southern Africa. Responsive and Responsible Leadership.
44
King IVTM is a trademark of the Institute of
46
Remuneration Committee Forum, Position paper 6,
Directors. March 2017, Fair and Responsible Remuneration,
Institute of Directors for Southern Africa.
The economics and ethics of pay
The Global PwC and An analysis of the PwC

The PwC REMChannel survey found In addition, malus and clawback
that the most junior workers in the provisionswhich require forfeiture,
London School of REMChannel survey survey (at Paterson grade A1 level) and in some cases repayment, of cash
Economics survey on the indicates that the most junior received increases of 16% during the and share-based incentives in the
past year. event of material misstatement of
ethics of incentives workers in the survey (at financial results, or major reputational
This survey is part of a research project Paterson grade A1 level) Structurally, the trend towards less or economic disasterhave added to
volatile and geared LTIs (share awards) the governance measures related to
that is being conducted by Professor
Alexander Pepper and Dr Susanne Burri received increases of 16% remains in place,48 with share options
and share appreciation rights being
executive remuneration.
of the London School of Economics during the past year.
replaced by restricted shares, bonus Institutional investors are also requiring
in conjunction with PwC. The survey
shares and performance shares, executives to build up their own
is currently in progress, with results
which provide better alignment with shareholding in the company to target
expected later in the year.
shareholder interests and are more likely levels that are generally expressed
A large number of stakeholders are to avoid extreme payouts. We explore as multiples of their own guaranteed
responding to a set of questions which the future of LTI structures in the package. These are known as minimum
gauges their views on distributive chapter where we discuss a new model shareholding requirements (MSRs).
justice with respect to distribution of
Executive pay trends for executive pay.
the profits of companies by means of The variable pay cap in terms
Large listed companies continue to In the UK and the EU, the regulatory
remuneration.
exercise caution when considering the changes (CRDIV) in the financial of CRD IV has decreased
pay levels of their CEO and executive services sector, which cap the absolute
The questions explore a range of
committee members.
the volatility and
paradigms, ranging from a Marxist level of variable pay to 100% of fixed
pay (up to 200% with shareholder maximum earning
approach on the one hand, to unfettered
free market principles on the other.
While the average levels of pay remain approval), have also decreased the potential of banking
high relative to workers, and are viewed volatility and maximum earning executives in the UK and
as excessive by institutional investors, potential of banking executives.
shareholders, trade unions and the other European countries..
general public, increases in guaranteed We are seeing the impact of these
pay have generally remained subdued regulations in South Africa among UK-
and are below those granted to workers. and European- headquartered banks
such as Barclays Africa, Investec and
1
Mercantile Bank.

48
PwC Long-Term Incentive Survey, 2016.
The Gini coefficient of We have updated the calculation of The concept of essential benefits,
the Gini coefficient of the employed in where companies explore the use of
the employed and the South Africa, based on the salary data their buying power to procure essential
pay ratio in the PwC RemChannel salary survey goods and services for their more
database at May 2017. The figure for this junior employees, is gaining traction.
In the 2014 edition, we calculated year remains stable at 0.43 compared The concept of a living wage, and
the Gini coefficient of the employed to 0.43 in 2015 and 2016 and 0.44 in the consideration of an appropriate
in South Africa on the basis of 2014. mechanism to establish the principles
all employees data in the PwC and practice of determination of this pay
RemChannel salary survey, as 0.44. The pay ratio for a company, which is level, is also emerging as a compelling
the ratio between the total remuneration solution to address junior worker pay.
This was much lower than the national of the CEO and the average or median
figure for all South Africans of 0.65 of the total remuneration of all other A dialogue has commenced with the UK
quoted by the World Bank. The primary employees of the company, ranges from Living Wage Foundation regarding how
reason for the difference between that 12.8 to 61.8 on the basis of our 2017 their methodology and approach could
national figure and our estimate of the data, compared to a comparable range be adopted in South Africa. However,
Gini coefficient of the employed is the of 12.7 to 64.8 in 2016. the most profound challenge is to gather
high rate of unemployment in South support and consensus from a diverse
Africa. Essential benefits and range of interests to yield a credible
approach and result.
The official rate of unemployment sufficient pay for junior
in South Africa as at Q1 2017 was workers These approaches may well offer ethical
27.7% with the extended definition and economically successful companies
of unemployment, which includes In the year since we first discussed a viable method of determining an
discouraged work-seekers, rising to an appropriate focus on the financial appropriate minimum level of payment
36.4%.49 wellness of junior workers and on for junior workers and provide a
ways to sustainably increase the pay mechanism for resolving toxic and
levels of junior workers, many South unproductive disputes over pay between
49
Quarterly Labour Force Survey, Q1 2017, Statistics African companies have been working business and labour.
South Africa.
on practical measures to address these
issues.
Conclusion
It is clear that discussions about the contribution of pay fairness to
addressing the issues of inequality, unemployment and poverty are
gaining momentum.
The global discussions on the matter at Davos, the new KingIV
requirement to consider fair and responsible remuneration in the context of the
overall remuneration of the organisation, and the almost daily mention of this
matter in the national and global discourse are evidence of this.
Our annual analysis of pay statistics indicates the Gini coefficient of the
employed has remained steady at 0.43, but that there is evidence of companies
attending to the plight of the most poorly paid employees, with an average
annual salary increase of 16% at this level.
The upper end of the pay ratio decreased somewhat from a range of 12.8 to
61.8 on the basis of our 2017 data, compared to a comparable range of 12.7 to
64.8 in 2016.
The results of the London School of Economics and PwC survey on the ethics
of incentives, which will be released soon, should also provide a useful moral
compass to assist remuneration committees and boards in setting their own
ethical framework.
Focus remains on executive pay, with generally subdued increases in executive
pay compared to lower-level staff, despite a few egregious examples of
inappropriate lump sum payments in the past year. South African companies are
now adopting the global trend of imposing malus and clawback conditions on
executive incentives, and requiring the adoption of MSRs.
Our opinion remains that focusing on the financial wellness of junior workers,
exploring essential benefits and aspiring to pay at least a living wage is a sound
strategy. In addition, investing in education and skills development provides
a longer-term solution to addressing inequality and achieving economically
sustainable prosperity.
Gender parity: The hidden
value
Furthermore, in PwCs The female While 60% of multinational Lehigh Universitys recent study,
Forty percent of todays millennial: A new era of talent51 organisations use global mobility Women on boards and firm financial
global workforce is study, in which nearly 10000 female to develop their future pipeline of performance: A meta-analysis tells a
millennials were surveyed across all leaders, only 16% said women are similar story.54 It looked at more than
female, yet women hold industries, 43% indicated an ongoing proportionately represented in their 90000 companies in 35 countries
just 5% of global CEO employer bias favouring men when mobility programmes, and just 22% and found a clear link between the
it comes to promotions and 30% are actively trying to increase their level of female board representation
positions. The need identified a bias favouring men level of female mobility. and market performance, though
to address the gender around career development. this occurs where women have a
A recent analysis of 300 US start- strong presence across all sectors of
imbalance becomes more The majority (71%) also agreed up investments backed by venture leadership.
evident when analysing that while organisations talk capitalists found that those companies
about diversity, they do not feel with a female founder performed In Africa only 5% of CEOs are
the statistics. opportunities are equal for all; this is 63% better than those with all-male women.55 This falls far short of the
up 17% since the previous survey. founding teams. desired target of 50% to achieve
gender equality. In South Africa, JSE-
The statistics In the financial services sector, PwCs This is in line with findings from PwCs listed companies have a long way to
Making diversity a reality 18th Annual Global CEO Survey go in achieving the target for female
The annual Strategy& CEO success found just 35% of female millennials where 85% of CEOs whose companies CEO. There is only one female CEO
study50 highlights the incoming class believe they can rise to senior levels had a formal diversity and inclusion in the top 40 JSE listed companies.
of CEOs at the worlds 2500 largest within their current organisation and strategy said it had improved their The sparseness in medium and small
public companies. Globally, companies nearly 30% dont believe there are top bottom line, while also enhancing cap companies are too few to warrant
appointed 12 women CEOs in female role models they can look up to innovation, collaboration, customer calculating a percentage.
20163.6% of new CEOs. This marks in their organisation.52 satisfaction and talent attraction.53
a return to the slow trend towards 54
http://amj.aom.org/content/58/5/1546.abstract
greater diversity that has been in place
53
https://www.pwc.com/gx/en/ceo-survey/2015/
55
Women Matter Africa making gender diversity a
over the last several years, and marks 51
https://www.pwc.com/jg/en/publications/the-
assets/pwc-18th-annual-global-ceo-survey-
reality: McKinsey & Company August 2016
a recovery from the recent low point of female-millennial-a-new-era-of-talent.html

jan-2015.pdf
2.8% seen in 2015. 52

https://www.pwc.com/gx/en/industries/financial-
services/assets/pwc-diversity-and-inclusion-
making-diversity-a-reality.pdf
50
https://www.strategyand.pwc.com/
Gender parity: The hidden value
Fig. 1 Gender pay gap: JSE-listed companies, 2016

South Africa offers equal opportunity Tertiary education: Executive
education to both sexes with nearly full directors of JSE-listed
enrolment in primary and secondary
17% 83% 19% 81% 20% 80% 19% 81% 20% 80%
education. Between the ages of 7 and 15
companies
years, 98.6% of girls are enrolled, and
98.3% of boys.
Graduates 61%
Women Masters 49%
As in most OECD and partner
56
PHD 43%
countries, women in South Africa are
more likely than men to study education
and health at the tertiary level. Women
also tend to be under-represented in Men
traditionally male-dominated fields Tertiary
such as engineering, manufacturing and education
AltX Basic Resources Financial Services Industrial Services
construction.57 Graduates 39%

Female Male Masters 51%
PHD 57%
56
The Organisation for Economic Co-operation and
Development (OECD) is a group of 35 member
Total guaranteed pay for women is still below the level paid to their male countries that discuss and develop economic and
counterparts, where equal pay for equal work should be the rule. It is encouraging to social policy.
see that this too is improving. 57
Education at a Glance: OECD Indicators 2016
Fig. 2 Gender median pay gap: JSE-listed company executives, female vs Women in South Africa are almost as
male (TGP) highly educated, and in some instances
more so, than their male counterparts.
Source: PwC analysis More than 60% of graduates from
bachelors, or equivalent, programmes
-11% -7% -7% -9% -8%
were women, which is higher than the
G20 average of 55% and the OECD
average of 58%. At masters and
doctoral level in South Africa, women
represent 49% and 43% of graduates
respectively.
AltX Basic Resources Financial Services Industrial Services
How can gender parity be Gender pay gap

rectified?
The critical area to achieving gender parity is still the gender pay gap. A simple extrapolation of historical trends suggests that the
OECD researchers have compiled an gender pay gap across the OECD might not close fully for almost a century, with some countries achieving parity earlier than
index that combines five key indicators others. To underline this disparity the table below suggests that in the developing countries achievement of this goal remains a
of female economic empowerment. long way off.
The Nordic countries, notably Iceland,
Sweden and Norway, continue to occupy
the top positions.
Factors essential to achieving

gender parity more quickly
Equal
earnings
Zero Parity Proporion

sexist dis- of women
crimination in absolute
terms
Lower
female
unemploy-
ment Source: OECD and Eurostat data
What are the causes of the pay gap? Although direct discrimination (women getting paid less than men for the same work) is a
factor, it does not fully explain the global gender pay gap. Research shows that once the unadjusted pay gap, which averages 10-
The JSE introduced listing requirements 20% in advanced economies, is controlled for occupation, education, experience, location and company, the resulting adjusted
in 2015 that require listed companies pay gap falls to less than 10%.
to have a policy for the promotion of
gender diversity at board level and Although direct discrimination is nevertheless an important factor driving the pay gap, other factors are also at work, namely the
disclose their performance against it. lack of female representation in higher-paying jobs and industries.
The provisions were effective from

January 2017, and the JSE will report
progress made by listed companies in
this regard.
Fig. 3 OECD countries gender pay-gap ranking (%) Policies that directly address these the OECD would increase female pay by
factors can, therefore, have a substantial almost US$2 trillion dollars.
Iceland impact on the gender pay gap. For Multiplier effects from this additional
Sweden example, increasing the availability of spending could generate an even larger
Norway
affordable childcare can help narrow boost to GDP. Not only would this be
New Zealand
the gap by enabling greater female the ethical thing to do, but it would
Denmark
Slovenia
participation in the workforce. also be profitable to companies and the
Luxembourg 2015/2016
countries in which they operate.58
Latvia 2014/2015
The high-performing countries
Finland have lower costs of childcare.
Switzerland Encouraging greater sharing of caring PwC analysis shows that
responsibilities, such as shared parental
Poland
Canada leave, can also help more women return
there are significant
Belgium to work earlier following the birth or economic benefits in
Israel adoption of a child.
United Kingdom the long term from
Australia
Portugal
Countries like Sweden have also taken increasing the female
it a step further by introducing use-
France
it-or-lose-it entitlements, which have
employment rate to
Estonia
Germany
significantly increased take-up by the match that of Sweden;
fathers.
Austria the GDP gains across the
Hungary
United States Creating flexible working opportunities OECD could be around
and making them more widely available
Netherlands
Ireland can enable employees to manage their US$6 trillion.
Czech Republic family commitments around work.
Italy Empathy here can also open up channels Source: PwC Women in Work Index
Japan for female career progression where,
Spain traditionally, performance is measured 58
http://pwc.blogs.com/psm_globally/2017/04/
Slovak Republic
based on inputs such as working hours women-in-work-the-potential-2-trillion-prize-from-
Turkey closing-the-gender-pay-gap-.html
rather than outcomes.
Chile
Korea
Mexico
Many studies have highlighted the
Greece benefits of increasing diversity in
0 5 10 15 20 25 30 35 40 leadership positions. Substantial
economic gains are possible by closing
Source: OECD and Eurostat data
the global gender gap. Pay parity across
UK gender pay reporting

Closing the gender pay
disclosure59
gap will not only make
The UK has joined a growing number of At a time when fairness and the role
countries, including the US, Australia, of business in society is under the an organisation more
Sweden and Denmark, which require spotlight, gender pay reporting will be a attractive to talent of
companies to publish gender pay data. new metric on which organisations will
be appraised. both sexes, but will also
PwC UK60 undertook a survey of 130 make it more productive
companies across all sectors to gauge While it is important to run the
their approach to managing these new numbers and look closely at how each and favourably perceived
reporting requirements. We take a closer organisation will come across under within the marketplace.
look at the legislation and the findings these new disclosure requirements and
of this survey and consider its possible reporting demands, it is more important
impact for South Africa. to understand how they will prepare
their approach to dealing with the
If your company compares unfavourably inequalities within their organisation.
to the organisations you compete with
for talent, the scrutiny could prove This may be the catalyst for
costly. It could deter the best candidates organisations to manage potentially
from joining your business and may unfavourable perceptions, and
influence existing staff who do not see a acknowledge that there are issues that
future in your organisation. need to be addressed and demonstrate a
commitment to resolving them.
Beyond the talent considerations, bad
publicity about diversity and inclusion For example, a renewed focus may
could put off customers, impair your be put on how to build diversity and
ability to tender for business or lead inclusion into a more compelling
to an increased risk of equal pay or employee value proposition in areas
discrimination claims. ranging from talent development and
succession planning to flexible working
and work-life balance.
59
Equality Act 2010 (Gender Pay Gap Information)
Regulations 2017 require employers with more than
250 employees to publish information about their
gender pay gap results.
60
http://pwc.blogs.com/press_room/2017/04/pwc-
experts-comment-on-gender-pay-gap-reporting.
html
Gender pay reporting: Deadlines and mandatory requirements

UK employers were required to take a The difference in the median bonus Gender pay forms part of the growing
first data snapshot on 5 April 2017, to pay between male and female focus on fairness and inclusion within
be analysed and published on a date of employees, expressed as a proportion our society, which are increasingly
their choosing, but no later than 4 April of the male figure; important elements of how businesses
2018. The gender pay gap information are expected to operate and how they
needs to be published on the employers The number of male and female
are judged.
website (and signed off by a senior relevant employees in each quartile of
executive to validate the accuracy of the overall pay range; and
the information). The figures also need The proportion of male and female
to be published on a Government- employees who received a bonus in
sponsored website. the year.
According to the regulations, companies In addition to this information,
will be expected to set out data on the employers can provide contextual
differences between their male and narrative explaining any pay gaps and
female employees, including: setting out what remedial action they
intend to take in line with the guidance
The difference in the mean hourly pay published alongside the regulations.
of male full-pay relevant employees
and female full-pay relevant While there are currently no civil
employees, expressed as a proportion penalties for non-compliance, the
of the male figure; Government is keeping this under
review. The broader challenges for
The difference in the median hourly companies are the potential negative
pay between male full-pay relevant publicity, the impact on the companys
employees and female full-pay reputation and employee relations, and
relevant employees, expressed as a the potential risk of equal pay claims.
proportion of the male figure;
The difference in the mean bonus pay The intention of the legislation isnt
between male and female employees, to name and shame (although this
expressed as a proportion of the male will inevitably happen), but rather to
figure; accelerate progress on gender equality
by closing pay gaps and bringing more
women into senior positions.
Profile of an executive
director
The cut-off date to view published accounts for listed companies was 28 April 2017.
Executive directors At this date, there were 1174 (2015: 1179) executive directors appointed to active
are responsible for the JSE-listed companies. There were 355 CEOs (2015: 338), 310 CFOs (2015: 304) and
509 executive directors (2015: 537) in office at that date.
successful leadership
and management of the Fig. 1 Executive directors JSE headcount, 2012-2016
organisation according
to the strategic direction 1 180
1 179
set by the board of 1 174

Trend
directors. Mandatory 1 145
appointments are CEO

and CFO.
1 024
2012 2013 2014 2015 2016
The number of executive directors has levelled out over the past few years. During
the 2016 reporting period, fifteen new companies listed on the JSE, 23 companies
delisted and 13 companies changed their names.
Headcount across sectors is also similar to that reported during past periods.
Profile of an executive director
Fig. 1 Number of executive directors of JSE companies by sector Fig. 2 Average age of executive directors by subsector
214 208 205 159 160 156 186 189 198 408 414 415 207 208 206
AltX 50
51
52
Automobiles & Parts
50
51
50
Banking
54
53
56
Base metal processing
60
58
59
Chemicals 56
53
54
Construction & materials
54
52
53
Financial Basic Resources Services Industrial AltX Development capital
51
50
55
2016: (Total 0000) 2015: (Total 1 179) 2014: (Total 1 180)
Financial services 52
50
53
Food 55
Source: PwC analysis 53
55
Healthcare 53
52
53
There has been a slight downward trend across industry subsectors in the median Industrial goods & services 52
50
and average age of executive directors to 52 and 53 respectively. Insurance
52
55
56
58
Investment instruments 51
52
54
Media
54
51
52
Mining 58
52
57
Oil & gas
54
56
55
Personal & household goods 59
57
59
Retail
57
53
56
Technology
56
53
55
Telecommunication
62
59
59
Travel & leisure
54
52
53
Median
54
52
55
Average 54
53
55
2014 2015 2016

Profile of an executive director
Board tenure for executive directors on the JSE for reporting periods 1994 to 2016 is
4.8 years. The longest tenure is for EDs, followed by the CEO and the CFO, trailing
somewhat at 3.8 years.
Fig. 3 Executive directors average board tenure, 1994-2016
Overall CEO CFO ED

Average tenure 4.8 4.3 3.8 5.3
AltX 4.0 3.6 2.9 4.4
Basic resources 4.8 4.3 3.9 5.3
Financial services 5.4 4.9 4.2 5.8
Industrial 5.0 5.0 4.1 4.9
Services 5.0 3.8 3.8 6.2
Executive directors
remuneration: JSE trends
Total guaranteed package

Total guaranteed package (TGP) is that Rand exchange rate against major currencies
portion of remuneration that is paid
regardless of company or employee Since April 2016 to the current cut-off date, the principal currencies in which some
performance and is a fixed cost made executives receive their remuneration have appreciated quite substantially.
up of salary plus stated benefits. Here
we review the TGP over a three-year Currency 29 April 2016 28 April 2017 Rand appreciation
timescale. Australian dollar 10.846 10.025 7.6%
LTIs are excluded since this is not only Euro 16.181 14.569 10.0%
complicated to define but difficult to
UK pound 20.774 17.277 16.8%
report on given the different schemes
companies have implemented over the US dollar 14.218 13.376 5.9%
years.
Source: Oanda.com
When directors are paid in foreign
currency and the amounts are converted
into rands, fluctuations in the exchange
rate may result in substantial increases
or decreases in the value of their
remuneration. On the JSE, 153 (2015:
140) executive directors were paid in
foreign currency during the period
under review.
Executive directors remuneration: JSE trends
Summary: Total guaranteed package

For ease of reference, the following summary draws together two years of data Published accounts are not coterminous Top 10
showing TGP levels and increases given to all positions: CEOs, CFOs and executive since companies have different financial
directors. The average inflation in South Africa for the 2016 reporting period was year ends. The comparator years are The top-10 listed companies on the JSE
6.6% (2015: 6.2%). the latest accounts available during the account for 60% (R8.4 trillion) of the
reporting period. This methodology is market capital invested. For the first
Total guaranteed package consistent for remuneration trends in all time, we analyse the total guaranteed
editions of this publication. packages paid to the executive directors
2015 R000s % Increase/ 2016 R000s % Increase/ of these companies (regardless of
Decrease Decrease industry sector). Since the sample is not
sufficiently large to calculate quartiles,
All of JSE
only the average has been used.
Upper quartile 6 040 8.7% 6 339 4.9%
Median 3 694 12.0% 3 906 5.7%
Fig. 1 TGP paid to executives of JSE top-10 companies
Lower quartile 2 147 3.2% 2 275 6.0%
CEOs CEO CFO ED
Upper quartile 7 697 7.9% 7 891 2.5%

Median 4 572 10.7% 4 846 6.0%
ZAR R000
Lower quartile 3 134 2.3% 3 332 6.3%
CFOs
Upper quartile 4 649 11.0% 4 888 5.1%
Median 3 213 -12.1% 3 398 5.8%
Lower quartile 1 901 -3.4% 2 021 6.3%
EDs
Upper quartile 4 229 14.2% 4 382 3.6% Average 24 605 13 799 7 718
Median 2 805 9.0% 2 975 6.1%

Lower quartile 1 985 -1.3% 2 149 8.3%
Basic resources
There are 53 active companies included
Fig. 2 Basic resources: Market Basic resources: Large caps
in this sector, with only eight still being
capitalisation by Median increases awarded in 2015/2016
listed among the large-cap companies
subsector
on the JSE. Most of these large-cap
2015 2016
companies have global operations,
with their headquarters and primary 8% CEO 1.3% 4.8%
listings outside of South Africa. The
16% CFO -3.5% 6.1%
remuneration levels within these large-
cap companies are either in the upper ED 1.5% 6.6%
76%
quartile or are outliers.
The main component of this sector is
mining companies. Since the 1990s, the Fig. 3 Large-cap CEO (R000s)
biggest influence on the global mining
sector has been growth in the Chinese Mining
economy. Between 2002 and 2012, the Industrial metals & mining
country experienced average annual Forestry & paper
GDP growth of 10.4%.
The Chinese growth cycle has since Source: PwC analysis

decelerated significantly. In 2015 it grew
at 6.9% and in 2016 at 6.7%, according
to official data released in Beijing. The
impact of weak global demand for raw
materials has negatively affected the
basic resources sector since 2008 and 2014 TGP 2015 TGP 2016 TGP
accordingly we have seen only modest TGP upper quartile 31 585 32 597 33 442
increases in directors remuneration TGP median 21 670 21 959 23 002
TGP lower quartile 18 061 18 344 17 433
across this sector.
Fig. 4 Large-cap CFO (R000s) Basic resources: Medium caps

Median increases awarded in 2015/2016
2015 2016
CEO 4.6% 4.4%
CFO 2.0% 3.9%
ED 6.0% 6.4%
Fig. 6 Medium-cap CEO (R000s)

2014 TGP 2015 TGP 2016 TGP
TGP upper quartile 15 809 16 917 17 913
TGP median 11 189 10 792 11 447
Fig. 5 Large-cap ED (R000s)
2014 TGP 2015 TGP 2016 TGP

TGP median 7 332 7 669 8 007
2014 TGP 2015 TGP 2016 TGP

TGP median 15 112 15 334 16 351
Fig. 7 Medium-cap CFO (R000s) Basic resources: Small caps

2015 2016
CEO 4.0% 5.9%
CFO 8.0% 8.6%
ED 4.0% 5.4%
Fig. 9 Small-cap CEO (R000s)

2014 TGP 2015 TGP 2016 TGP
TGP median 5 018 5 119 5 321
Fig. 8 Medium-cap ED (R000s)
2014 TGP 2015 TGP 2016 TGP

TGP median 1 533 1 594 1 688
2014 TGP 2015 TGP 2016 TGP

TGP median 3 390 3 592 3 822

Fig. 10 Small-cap CFO (R000s)
2014 TGP 2015 TGP 2016 TGP

TGP median 1 530 1 652 1 794
Fig. 11 Small-cap ED (R000s)
2014 TGP 2015 TGP 2016 TGP

TGP median 1 828 1 901 2 003

Financial services
There are 95 companies included in Fig. 12 Financial services:
Financial services: Large caps
this sector. They are spread over seven Market capitalisation by Median increases awarded in 2015/2016
subsectors. subsector
2015 2016
Facing an environment of low economic
4% 1%
growth and high unemployment, the CEO 0.6% 6.3%
squeeze on consumer spending has been CFO 7.0% 6.9%
tightening over a number of years. This 6%
has had a significant impact on financial 11% ED 5.0% 7.0%

services companies, which have 37%
increasingly turned to cost reduction
and expanding their businesses beyond 19%
South Africa in order to bolster returns. Fig. 13 Large-cap CEO (R000s)
These initiatives have had mixed results 22%
and the performance of executive
Banks
directors is being keenly observed by
Life insurance
shareholders. Real estate investment trusts
Financial services
Real estate investment and services
Equity investment services
Non-life insurance
2014 TGP 2015 TGP 2016 TGP

TGP median 7 006 7 050 7 494
Fig. 14 Large-cap CFO (R000s) Financial services: Medium caps

2015 2016
CEO 6.0% 5.3%
CFO 6.4% 9.4%
ED 8.0% 3.3%

2014 TGP 2015 TGP 2016 TGP
TGP median 4 292 4 592 4 908
2014 TGP 2015 TGP 2016 TGP

TGP median 3 483 3 692 3 887
2014 TGP 2015 TGP 2016 TGP

TGP median 3 882 4 076 4 362

Fig. 17 Medium-cap CFO (R000s) Financial services: Small caps

2015 2016
CEO 3.5% 9.3%
CFO 7.1% 6.5%
ED 5.0% 5.8%

2014 TGP 2015 TGP 2016 TGP
TGP median 2 129 2 266 2 480
2014 TGP 2015 TGP 2016 TGP

TGP median 2 100 2 174 2 377
2014 TGP 2015 TGP 2016 TGP

TGP median 2 401 2 593 2 678

2014 TGP 2015 TGP 2016 TGP

TGP median 1 533 1 642 1 749
2014 TGP 2015 TGP 2016 TGP

TGP median 1 530 1 607 1 701
TGP lower quartile 881 1 188 1 485

Industrials
There are 113 companies included in Fig. 22 Industrials: Market Industrials: Large caps
this sector. They are spread over nine capitalisation by Median increases awarded in 2015/2016
subsectors. subsector (%)
2015 2016
With the pressure on the basic 3.08%
1.73% CEO 6.0% 3.3%
resources sector, focus has moved onto 3.76%
the industrial sector to grow South 5.65% CFO 10.0% 2.2%
Africas GDP. The recent downgrade
5.77% ED 22.2% 6.3%
of South Africas sovereign debt
rating will only add to the pressure on 7.08%
34.34%
industrial companies, which are already
contending with high energy and 9.34%
other input costs; the negative impact Fig. 23 Large-cap CEO (R000s)
of a strong rand on exports; labour 29.25%
problems; low productivity; lack of Tobacco
meaningful innovation; and a range of Beverages
other challenges. Personal goods
Household goods & home construction
Chemicals
General industrials
Food producers
Pharmaceuticals & biotechnology
Others
2014 TGP 2015 TGP 2016 TGP

TGP median 13 924 14 759 15 241
Fig. 24 Large-cap CFO (R000s) Industrials: Medium caps

2015 2016
CEO 4.0% 6.7%
CFO 3.9% 6.8%
ED 3.0% 4.7%

2014 TGP 2015 TGP 2016 TGP
TGP median 6 419 7 061 7 216
2014 TGP 2015 TGP 2016 TGP

TGP median 5 741 5 969 6 369
2014 TGP 2015 TGP 2016 TGP

TGP median 4 357 5 326 5 661
Fig. 27 Medium-cap CFO (R000s) Industrials: Small caps

2015 2016
CEO 4.9% 6.0%
CFO 17.5% 6.5%
ED 7.0% 8.2%

2014 TGP 2015 TGP 2016 TGP
TGP median 3 632 3 775 4 030
2014 TGP 2015 TGP 2016 TGP

TGP median 3 345 3 510 3 720
2014 TGP 2015 TGP 2016 TGP

TGP median 3 901 4 018 4 208

2014 TGP 2015 TGP 2016 TGP

TGP median 2 002 2 352 2 505
2014 TGP 2015 TGP 2016 TGP

TGP median 2 007 2 147 2 322

Services Services: Large caps

There are 53 companies in this sector.
They are spread over ten subsectors. Fig. 32 Services: Market
2015 2016
capitalisation by
The services sector is facing the subsector (%) CEO 6.0% 4.8%
challenges of embracing the digital CFO 9.0% 8.1%
revolution, competing with innovative 3% 2%
new entrants to their markets and 4% ED 10.0% 7.7%
6%
rapidly changing customer expectations
3% Source: PwC analysis
and behaviour.
3%
These changes are happening rapidly 39%
9% Fig. 33 Large-cap CEO (R000s)
and executive directors in the sector will
be challenged to ensure their businesses
come out on top. 21%
Media
Mobile telecommunications
Food & drug retailers
Travel & leisure
Industrial transport
General industrials
Food producers
Pharmaceuticals & biotechnology
Others
2014 TGP 2015 TGP 2016 TGP

TGP median 7 287 7 724 8 091
Fig. 34 Large-cap CFO (R000s) Services: Medium caps

2015 2016
CEO 8.0% 15.1%
CFO 4.0% 1.6%
ED 11.0% 8.1%

2014 TGP 2015 TGP 2016 TGP
TGP median 3 590 3 913 4 229
2014 TGP 2015 TGP 2016 TGP

TGP median 4 601 4 969 5 718
2014 TGP 2015 TGP 2016 TGP

TGP median 3 001 3 301 3 555

Fig. 37 Medium-cap CFO (R000s) Services: Small caps

2015 2016
CEO 9.0% 3.2%
CFO 5.0% 6.9%
ED 4.0% 7.8%

2014 TGP 2015 TGP 2016 TGP
TGP median 3 844 3 998 4 061
2014 TGP 2015 TGP 2016 TGP

TGP median 3 534 3 852 3 975
2014 TGP 2015 TGP 2016 TGP

TGP median 2 567 2 849 3 079

2014 TGP 2015 TGP 2016 TGP

TGP median 1 997 2 097 2 242
2014 TGP 2015 TGP 2016 TGP

TGP median 2 167 2 254 2 430

AltX Fig. 43 AltX CFO (R000s)
There were 46 actively trading companies listed on the AltX at our cut-off date.
The AltX is the JSEs board for small and medium-sized high-growth companies. The
AltX provides smaller companies with access to capital, while providing investors
with exposure to fast-growing smaller companies in a regulated environment.
2015 2016
CEO 7.0% 8.6%
CFO 4.0% 6.7% 2014 TGP 2015 TGP 2016 TGP
ED 6.0% 6.7% 1 304 1 356 1 447
TGP median
TGP lower quartile 659 834 861

Fig. 42 AltX CEO (R000s)
Fig. 44 AltX ED (R000s)
2014 TGP 2015 TGP 2016 TGP

TGP median 1 805 1 931 2 098 2014 TGP 2015 TGP 2016 TGP
TGP median 1 600 1 696 1 809
Short-term incentives
Short-term incentives (STIs) are annual There are many methods of calculating STIs,
incentives intended to compensate Fig. 45 Large-cap STIs (R000s)
which are normally expressed as a percentage
executives for achieving the companys of the executives salary or TGP. Plans are
CEO CFO ED
short-term business strategy based on constructed to provide threshold, target
the achievement of goals set by the and maximum levels of performance which,
boards compensation or remuneration subject to actual performance, can generate
committee. different levels of STI payments. Performance
below threshold should result in no award and
Short-term incentives evolve around performance above the maximum level may be
stated strategies and are typically capped at the maximum payout tier to mitigate
financial in naturethese are easily risk taking.
calculated from achieved financial
results. The figures that follow depict current STI trends
for executives in all sectors of the JSE.
But we are also seeing greater focus
being placed on non-financial metrics. All industries: Large caps 2014 12 326 4 025 4 592
2015 14 259 6 595 7 745
These are more complex and are based 2016 14 837 7 575 10 258
on intrinsic key performance indicators Median increases awarded in 2015/2016
(KPIs) that reach beyond the balance
sheet and can be measured against 2015 2016
sustainable development goals (SDGs). CEO 16.% 4%
These cover a number of targets, CFO 64% 15%

including but certainly not limited to, ED 69% 32%
ethics, the environment and outcomes
such as reducing the companys carbon Source: PwC analysis
footprint.
All industries: Medium caps All industries: Small caps

2015 2016
2015 2016
CEO 46% -6%
CEO -14% 35%
CFO 6% 25%
CFO 2% 18%
ED 182% 2%
ED -3% 31%
Source: PwC analysis Source: PwC analysis
Fig. 46 Medium-cap STIs (R000s) Fig. 47 Small-cap STIs (R000s)
CEO CFO ED CEO CFO ED
2014 4 499 1 962 2 438 2014 1 535 784 800

2015 6 567 2 079 4 444 2015 1 320 801 780
2016 6 163 2 590 4 524 2016 1 779 947 1 022
FTSE 100 executive director
remuneration trends
Fig. 1 Market capitalisation: FTSE 100: Single-figure remuneration reporting

At 28 April 2017, there FTSE vs LSE
In the United Kingdom, all listed The directors remuneration report for
were 2 036 (2015: companies, except for small businesses a quoted company is different from
2324) companies that are exempt, are required, with the old-style rendition. A key aspect
effect from 1 January 2016, to of this is the single figure approach
listed on the London FTSE 100
market cap disclose an aggregate remuneration for the compensation of each director
Stock Exchange (LSE), US$2.447
trillion
for each director when preparing the that includes a value placed on share-
remuneration report. based payments and pension benefits
of which the FTSE 100 LSE Total
market cap using calculations prescribed in the
represented 45% (2015: US$5.475
trillion
The definition of a listed company in regulations.
section 385 of the UK Companies Act
44%) of total market 2006 is a corporation whose quoted The aggregation is the sum of:
capitalisation. share capital is listed in the UK or
another EEA state60,or is listed to Salary;
trade on the New York Stock Exchange
Source: PwC analysis Stated benefits;
or NASDAQ. AIM businesses61 and
corporations that have only debt or non- Pension;
FTSE 100 companies are not ranked equity share capital registered do not
on market capitalisation alone. As at Annual bonus;
fall within the scope of the requirement
28 April 2017, FTSE 100 companies are to prepare a directors remuneration Deferred bonus; and
included in the top 148 (2015: 166) report. Long-term incentives.
companies by market capitalisation.
60
European Economic Area: the member states The observations made in this section
of the European Union are: Austria, Belgium,
Bulgaria, Croatia, Denmark, Finland, France, of the report are limited to what is
Germany, Greece, Ireland, Italy, Luxembourg, The considered total annual guaranteed pay,
Netherlands, Portugal, Spain, Sweden, United
Kingdom, Cyprus, Czech Republic, Estonia,
including pensions but excluding all
Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, variable pay.
Slovenia and Romania.
61
AIM (formerly the Alternative Investment Market) is
a sub-market of the London Stock Exchange that
was launched in 1995. It allows smaller companies
to float shares with a more flexible regulatory
system than is applicable to the main market.
FTSE 100 executive director remuneration trends
For purposes of this report, to have

Fig. 2 FTSE 100 sector profile All sectors
relevance to the total guaranteed pay
data reported for JSE-listed companies, Fig. 3 All positions: Base pay and stated benefits (US$000s)
we have included only the base pay and 8
24
stated benefits paid to directors serving
on the boards of FTSE 100 companies.
The trends reflected are extracted from

the annual reports of the most recent Basic Financial
resources Sectors services
FTSE 100 participants falling within our
reporting period ended 28 April 2017.
One-year historical data has now been 28
included since this is a trends report of 40
remuneration paid, and although the
companies included in the FTSE 100
selection change slightly on a quarterly
Industrials Services Upper quartile Median Lower quartile
basis, we have tracked the trends around
2015 $1501 $1037 $759
remuneration actually paid. 2016 $1566 $1060 $804
The trends reflected are extracted

from the annual reports of the most Under each sector further granularity is Source: PwC analysis
recent FTSE 100 participants. These are drawn to reflect the remuneration for
presented as follows: the following positions:
Fig. 4 CEO: Base pay and stated benefits (US$000s)
All sectors; CEO;
Basic resources; CFO; and
Financial services; ED.
Industrials; and
The values extracted are converted to US
Services sector. dollars and presented as upper quartile,
median and lower quartile.
Upper quartile Median Lower quartile
2015 $1995 $1476 $1049

2016 $2003 $1498 $1040
Executive directors: Practices and remuneration trends report Source: PwC analysis 9th edition: July 2017 69
Fig. 5 CFO: Base pay and stated benefits (US$000s) Basic resources
Fig. 7 All positions: Base pay and stated benefits (US$000s)
2015 $1172 $938 $696

2016 $1201 $998 $709 Upper quartile Median Lower quartile
2015 $1941 $1080 $909

2016 $2007 $1122 $975

Fig. 6 ED: Base pay and stated benefits (US$000s)
2015 $1396 $ 962 $667

2015 $4784 $2613 $2003

2016 $4855 $2719 $2075

Fig. 9 CFO: Base pay and stated benefits (US$000s) Financial services
2015 $6821 $1292 $ 985

2015 $1633 $ 964 $691

2016 $1688 $1031 $724

2015 $1214 $ 985 $848

2015 $2101 $1565 $1311

2016 $2122 $1601 $1411

Fig. 13 CFO: Base pay and stated benefits (US$000s) Industrials

2015 $1290 $913 $691

2016 $1315 $988 $695
2015 $1630 $1131 $877
2016 $1692 $1168 $904

2015 $1072 $774 $608

2015 $2014 $1607 $1094

2016 $2027 $1702 $1109

Fig. 17 CFO: Base pay and stated benefits (US$000s) Services sector
2015 $1267 $977 $774

2015 $1370 $1009 $724

2016 $1408 $1059 $746

2015 $1464 $1054 $736

2015 $1549 $1279 $1035

2016 $1624 $1299 $1068

Fig. 21 CFO: Base pay and stated benefits (US$000s) Fig. 22 ED: Base pay and stated benefits (US$000s)
Upper quartile Median Lower quartile Upper quartile Median Lower quartile
2015 $1042 $926 $677 2015 $1316 $970 $606

2016 $1059 $984 $699 2016 $1387 $999 $625
Remuneration trends in other
sub-Saharan African countries
Lack of transparent reporting limits

Fig. 1 Sectoral breakdown of
There are 54 granular representation of all African-
companies analysed
listed companies. Our analysis covers
independent countries 412 companies listed on seven sub-
17% 36%
in Africa. Twenty-nine Saharan Africa stock exchanges in the
following countries:
stock exchanges trade in
Africa. Most of these are Botswana
fledgling markets. Some Ghana

Basic Financial
are regional exchanges Kenya
resources Sectors services
and do not represent any Namibia
Nigeria 34% 13%
particular country.
Tanzania
This edition marks the Uganda
third year in which
we analyse trends in Industrials Services
executive directors Source: PwC analysis
remuneration in sub-
Saharan Africa.
Remuneration trends in other sub-Saharan African countries
Sub-Saharan stock exchanges analysed Data analysed

To maintain comparability to total guaranteed pay reported for JSE-listed companies,
for purposes of this report, we view the aggregate of base pay and stated benefits
paid to executive directors serving on the boards of African companies as TGP.
Remuneration sector analysis by country is not yet possible given the lack of
Tunisia
o information and the small number of listed entities in each sector.
ro cc
Mo
For countries selected, further detail is provided by reflecting remuneration paid to
Algeria Libya Egypt the following executives:
CEOs;
Mauritania Mali Niger Sudan

CFOs; and
Cape Verde Chad
EDs.
Er
itr
uti
ea
Senegal Djibo
Fa na
Gambia
so
i
rk
Values have been converted into US dollars, using the closing dollar spot rate at
Benin
Guinea Bissau
Bu
Guinea Nigeria South Ethiopia

ral midnight on 28 April 2017.
Ghana
Cent public Sudan

Togo
Cte
ia
Sierra Leone
n
al
Re
oo
dIvoire n
m
fric a
A
er
So
Liberia
am
a Fig. 2 Selected stock exchanges: Number of companies listed by sector

nd
Kenya
C
ga
U
So Tom and Prncipe Democratic

o
Gabon Rwanda
Cong
Republic 80
Equatorial Guinea of Congo Burundi Seychelles
Tanzania
70
70
Comoros
Malawi
63
Angola Mayotte 60
Zambia
50
e
e
qu
bw
ba
bi
Zim
am
r
ca
oz
40
as
Namibia Reunion
M
ag
Botswana
ad
M
Mauritius
30 30
Seven African Stock Exchanges examined Swaziland
24 24
South Lesotho 20
19 20
Africa 17 17 16
13
10 10
0 500 1000 Nautical Miles 8 9 8 8
6 6 7 7 6
4 4 4 3 5 4
0
Botswana Ghana Kenya Namibia Nigeria Tanzania Uganda
Financial services Industrials Services Basic resources

TGP for selected stock exchanges Remuneration of executive directors by country

TGP for the 412 companies, where good data is available, is depicted in quartiles: Fig. 4 Botswana: TGP (USD 000s)
Fig. 3 TGP of EDs in selected stock exchanges (USD 000s) CEO CEO CEO CFO CFO CFO ED ED ED
2014 2015 2016 2014 2015 2016 2014 2015 2016
CEO CEO CEO CFO CFO CFO ED ED ED

2014 2015 2016 2014 2015 2016 2014 2015 2016
Upper quartile TGP000 231 241 246 141 147 151 177 189 190
Median TGP000 198 209 217 125 133 129 154 153 162
Lower quartile TGP000 168 162 172 110 112 113 120 119 116
Median TGP000 245 234 241 174 176 172 173 162 166
Base: 37 companies listed on the Botswana Stock Exchange
Base: 412 companies listed on seven sub-Saharan stock exchanges
Fig. 5 Ghana: TGP (USD 000s)

2014 2015 2016 2014 2015 2016 2014 2015 2016
Median TGP000 191 196 190 121 122 120 138 144 150
Executive directors: Practices and remuneration trends report Base: 43 companies listed on the Ghana Stock Exchange 9th edition: July 2017 77
Fig. 6 Kenya: TGP (USD 000s) Fig. 8 Nigeria: TGP (USD 000s)
CEO CEO CEO CFO CFO CFO ED ED ED CEO CEO CEO CFO CFO CFO ED ED ED
2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016
Upper quartile TGP000 224 234 247 121 142 144 114 120 123 Upper quartile TGP000 341 345 332 246 252 248 259 263 266
Median TGP000 185 186 177 105 111 110 98 101 104 Median TGP000 292 307 311 213 219 221 213 220 224
Lower quartile TGP000 153 157 148 85 92 84 86 90 91 Lower quartile TGP000 246 250 251 181 190 193 179 183 176
Base: 66 companies listed on the Kenya Stock Exchange Base:187 companies listed on the Nigerian Stock Exchange
Fig. 7 Namibia: TGP (USD 000s) Fig. 9 Tanzania: TGP (USD 000s)
CEO CEO CEO CFO CFO CFO ED ED ED CEO CEO CEO CFO CFO CFO ED ED ED
2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016
Upper quartile TGP000 303 304 319 195 209 213 203 209 214 Upper quartile TGP000 356 357 311 214 221 225 230 241 244
Median TGP000 262 272 284 164 175 174 180 187 188 Median TGP000 350 308 285 195 190 191 189 197 202
Lower quartile TGP000 203 200 199 145 153 152 156 153 156 Lower quartile TGP000 279 290 263 153 154 148 158 161 163
Base: 41 companies listed on the Namibian Stock Exchange Base:21 companies listed on the Dar es Salaam Stock Exchange
Fig. 10 Uganda: TGP (USD 000s)

2014 2015 2016 2014 2015 2016 2014 2015 2016
200
Median TGP000 152 157 159 127 129 128 136 135 139
Base: 17 companies listed on the Uganda Stock Exchange

Appendices
The South African marketplace

South African marketplace
companies 360
AltX Basic resources Financial services Industrial Services

46 53 95 113 53
Forestry and Banking Auto & parts Healthcare

paper 6 2 4
3
Industrial metals Development Beverages Media

& mining capital 5 6
7 10
Mining General nances Chemicals Pharmaceuticals

43 25 6 6
Insurance Construction & Retail

10 materials 24
19
Investment Tele-
Food producers Communications
instruments
15 4
11
Real estate Industrial goods Travel & leisure

33 & services 9
37
Oil & gas

5
Personal goods
7
Technology
17
Appendices
The FTSE 100 marketplace 2017

The FTSE100
marketplace 2017
Basic resources Financial services Industrial Services

8 24 28 40
Oil & gas Banking Aerospace & Tele-

3 5 defence Communications
3 3
Mining Financial services Auto & parts Retail

4 6 1 9
Forestry and Insurance Beverages Transportation

paper 9 4 1
1
Real estate & Construction & Media

investment materials 5
4 1
Food producers Travel & leisure

2 9
General industrial Support services

2 8
Healthcare goods Software

1 1
Household goods Utilities

5 5
Pharmaceuticals &
biotechnology
6
Technology
hardware &
equipment 1
Tobacco
2
Appendices
The African marketplace 2017 (seven countries, excluding South Africa)
African stock exchanges

412 companies
Botswana Ghana Kenya Namibia Nigeria Tanzania Uganda

37 43 66 41 187 21 17
Financial Financial Financial Financial Financial

Financial Financial Financial
Financial
services 18 services 15 services 23 services 20 services
services 23
60 services 7 services
services23
8
Industrials Industrials Industrials Industrials Industrials Industrials Industrials

2 16 24 7 71 7 4
Services Services Services Services Services Services Services

6 5 12 5 28 4 4
Basic Basic Basic Basic Basic Basic Basic

resources resources resources resources resources resources resources
11 7 7 9 28 3 1
Appendices
About PwC Acknowledgements Contacts

At PwC we apply our industry We would like to thank the following for their valuable contribution to this report: For more information about the issues
knowledge and professional expertise raised in this report, please contact:
to identify, report, protect, realise and Gerald Seegers
create value for our clients and their Gerald Seegers
Martin Hopkins
stakeholders. +27 11 797 4560
Karen Crous gerald.seegers@pwc.com
The strength of this value proposition Leila Ebrahimi
is based on the breadth and depth of Martin Hopkins
the firms client relationships. Networks Anelisa Keke
+27 11 797 5535
are built around clients to provide them Dave Yzelle Independent project researcher martin.e.hopkins@pwc.com
with our collective knowledge and
resources. Our international network, PwC Australia
Karen Crous
experience, industry knowledge and PwC UK
business understanding are used to karen.crous@pwc.com
build trust and create value for clients. PwC US
Julia Fourie
We are committed to making PwC +27 21 529 2170
distinctive through consistent julia.fourie@pwc.com
behaviours that enable the success of
our clients and people. We call this the Anelisa Keke
PwC Experience and it shapes the way in +27 21 529 2000
which we interact with clients, with one anelisa.keke@pwc.com
another and with the communities in
which we operate. This, along with our Leila Ebrahimi
core values of Teamwork, Leadership
+27 11 7970887
and Excellence and our strong Code of
leila.ebrahimi@pwc.com
Conduct guides us in all that we do.
For media enquiries, please contact:
Sonja Nel
+27 11 797 4207
sonja.nel@pwc.com
The information contained in this publication is provided for general information purposes only, and does not constitute the provision of legal or professional
advice in any way. Before making any decision or taking any action, a professional adviser should be consulted. No responsibility for loss to any person acting
or refraining from action as a result of any material in thias publication can be accepted by the author, copyright owner or publisher.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the
information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Inc, its subsidiary and
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9th edition, July 2017, South Africa

Executive summary A new model for Executive directors Appendices

KingIV hidden value

Say on pay: A global Profile of an executive

Minimum Least value,

Outlier Less than 1/5

On one hand, this could curb what are Australia

Malus must be applied to unvested South Africa

Remuneration governance and disclosure

What is fair and responsible?

Understanding and Fig. 1 Voting patterns on

and Governing Risks, Corporate

Sweden The Netherlands

The Swedish guidelines are laid out

Are the days of long-term incentives numbered?

Key features of the plan

Reduced participation in the share incentive, with consequently less dilution.

Contrary to the previous industrial Digitization has

The standard questions posed when

CEOs in the digital world Rethinking the business

The Global PwC and An analysis of the PwC

a recovery from the recent low point of female-millennial-a-new-era-of-talent.html

2.8% seen in 2015. 52

Fig. 1 Gender pay gap: JSE-listed companies, 2016

construction.57 Graduates 39%

AltX Basic Resources Financial Services Industrial Services

How can gender parity be Gender pay gap

Factors essential to achieving

Zero Parity Proporion

The provisions were effective from

UK gender pay reporting

Gender pay reporting: Deadlines and mandatory requirements

set by the board of 1 174

appointments are CEO

2012 2013 2014 2015 2016

Source: PwC analysis

2014 2015 2016

Source: PwC analysis

Fig. 3 Executive directors average board tenure, 1994-2016

Overall CEO CFO ED

Source: PwC analysis

Total guaranteed package

Summary: Total guaranteed package

Upper quartile 7 697 7.9% 7 891 2.5%

Median 2 805 9.0% 2 975 6.1%

Source: PwC analysis

The Chinese growth cycle has since Source: PwC analysis

Fig. 4 Large-cap CFO (R000s) Basic resources: Medium caps

Fig. 6 Medium-cap CEO (R000s)

Source: PwC analysis

Fig. 5 Large-cap ED (R000s)

2014 TGP 2015 TGP 2016 TGP

Source: PwC analysis

2014 TGP 2015 TGP 2016 TGP

Source: PwC analysis

Fig. 7 Medium-cap CFO (R000s) Basic resources: Small caps

Source: PwC analysis

Fig. 9 Small-cap CEO (R000s)

Source: PwC analysis

Fig. 8 Medium-cap ED (R000s)

2014 TGP 2015 TGP 2016 TGP

Source: PwC analysis

2014 TGP 2015 TGP 2016 TGP

Source: PwC analysis