Sep 18, 2012
Govt considers capping salaries of State company execsBack
Denel|Eskom|Public Enterprises|Transnet|Kenneth Sinclair|Malusi Gigaba|Tshediso Matona
© Reuse this
A moratorium had been placed on increases until the new ‘Remuneration Standards’ had been adopted.
Responding to a Parliamentary question posed by Kenneth Sinclair of the Congress of the People, Public Enterprises Minister Malusi Gigaba indicated that his department was in the final stages of developing new standards for SoC executive and nonexecutive directors.
Once adopted, these standards would be “enforced on the SoC with no deviation”, with implementation anticipated during the current financial year.
The DPE has direct shareholder oversight for eight SoCs, including large entities such as Eskom, Transnet and Denel, and their financial years begin in April and conclude at the end of March.
“It is important that changes to existing remuneration policies be phased-in with the transition taking account of existing employment contracts,” Gigaba said.
The standards would be informed by a set of guiding principles that would be “rational, transparent and require consistent application” and they will seek to strike a balance between the State’s national objectives and the company’s commercial imperatives.
Future packages would be based on issues such as economic impact and the company’s funding model and performance would be measured and aligned to the shareholder’s compact.
“This exercise has entailed considering various policy objectives such as the capping of remuneration for a reasonable period, until the gap between executives and ordinary workers has narrowed,” Gigaba revealed.
The statement was in line with recent utterances on the issues by DPE director-general Tshediso Matona, who said the new model would seek to strengthen the link between performance, as defined by shareholder compacts, and remuneration.
A challenge, was how to respond in instances where remuneration levels had already breached certain thresholds. “[In those circumstances], what do you do? Do you undertake a massive across-the-board reduction of remuneration levels, which are bound in contractual relationships? Or, do you temper the rate at which these remuneration levels are rising? I think the answer lies between those two extremes,” Matona said.
In future, bonuses needed to be justified by “demonstrable achievements” of the company and its executives against the shareholder compact.
There was also a need to de-emphasise the monetary rewards and re-emphasise the public-service dimension, while “not making remuneration incentives so unattractive as to place the companies themselves at risk”.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Infrastructure News
Updated 5 hours ago Container traffic through Kenya's biggest port grew by 12.8% in the first six months of the year after new cargo handling infrastructure was built to shorten the turnaround time for ships. The Indian Ocean port of Mombasa, the biggest in east Africa and the region's...
Updated 7 hours ago South African electricity tariffs are likely to increase by more than the 8% already sanctioned for the year starting April 1, 2015, after the energy regulator determined on Wednesday that Eskom had under recovered R7.82-billion in revenue between 2010 and 2013. The...
Updated 3 hours ago Nigeria-focused oil and gas explorer Oando Energy Resources (OER) on Wednesday announced that it had completed the acquisition of the Nigerian upstream oil and gas business of New York-listed ConocoPhillips for a total cash consideration of $1.5-billion as well as a...
Updated 3 hours ago The disciplinary hearing of telecommunications giant Telkom’s suspended CFO Jacques Schindehütte was set to resume next Wednesday. Telkom said it hoped the hearing would result in a definitive resolution on the matter of Schindehütte’s personal conduct after a...
Updated 4 hours ago While unauthorised expenditure by South Africa’s municipalities has declined year-on-year, irregular expenditure has recorded a R2-billion increase as municipalities failed to follow legislated procurement procedures, the latest Auditor-General South Africa audit...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...