Pretoria. – CEOs of large mining companies paid themselves more than double what other JSE executives received last year, a survey by PwC shows.
According to information from the annual reports of listed companies for the 12 months ended April, mining bosses received a 9,3 percent raise in guaranteed pay, while the average increase for executives was 4.5 percent.

While average guaranteed remuneration was R3.1m, it was R8.8m for CEOs of the 11 large-capitalisation resource companies.

Guaranteed pay excludes shares and performance incentives, and usually makes up about a third of total packages.

Most private-sector employees in South Africa only received salary increases to match inflation of less than 6 percent last year, and unions have engaged in increasingly violent and protracted strikes this year.

Workers in the platinum sector demanded basic pay of R12,500.

Fear is growing in the private sector that the government will be forced by unions to draft legislation to control pay levels, as the gap between CEOs and average workers remains far wider than in other developing countries.

This gap is 73 times, PwC says, but fund manager Mergence reported last month that it was more than 300 times for each of the seven highest-paid CEOs.

India’s pay differential is only 32 times, and it is 55 in Australia.

In January last year then mineral resources minister Susan Shabangu warned Anglo American Platinum it risked losing its mining licence after it announced plans to scale back operations that would cost up to 14,000 workers their jobs.

Adcorp labour market analyst Loane Sharp said on Wednesday such interference, potentially through legislation to control and reduce executive pay levels would only damage the economy.

PwC’s Gerald Seegers said while new hires in the mining sector might have been a factor behind the higher pay levels, the trend of mining executives receiving higher salaries than other executives was a “genuine concern”, especially in light of the strikes this year.

Mining CEOs took a pay drop of 4,2 percent in 2012.

Mr Seegers said more self-regulation was the answer, and that it would be a “disaster” if the government tried to lower CEOs’ salaries by levying higher taxes.

California recommended tax hikes of up to 50 percent for companies where top earners were paid 400 times more than average workers.

This proposal was blocked in a recent legislative vote, but only marginally.

Its opponents worried that the state would continue to lose business. Some US companies have pay gaps nearing 2 000 times.

Increasing attention is being paid to pay gaps worldwide, and PwC said shareholders and the public in South Africa were “particularly concerned” about unsustainably high executive pay, where company results were poor.

While more engagement with shareholders on pay proposals for executives was happening, subsequent efforts to fully address those concerns were lacking.

Institute of Directors Southern Africa CEO Ansie Ramalho said the King 3 code on corporate governance was being rewritten. But she said the recommendation would not be to implement rules on wage gaps, but to require more specific disclosure on pay practices.

Higher levels of shareholder activism would be encouraged, Ms Ramalho added. – Bdlive

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