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So much for solidarity and the rather fanciful notion that the Covid pandemic was something of a “leveller” and we were “all in it together”.
As the post-Covid company results trickle out, one thing is evident: South Africa’s top executives may have suffered a temporary dent in their remuneration, but bonuses over the past two years have made up for most of that knock.
Nowhere is this more evident than in the banking sector. In April 2020, bank executives were cajoled into taking pay cuts by President Cyril Ramaphosa’s announcement that he was taking a 33 percent cut for the following three months.
Having made a bland commitment to ensure executive pay was “appropriate for performance and the environment”, Ramaphosa’s move prompted Nedbank to take things up a notch. It announced that chief executive officer Mike Brown would follow Ramaphosa’s lead and take a one-third cut in salary for the next three months.
Next up was FirstRand, which said its CEO, chief financial officer and chief operating officer would also take a one-third cut for three months.
Then Absa announced five of its top executives would donate 33 percent of their monthly salaries over the following three months to the Solidarity Fund.
Standard Bank was a little more circumspect and a little less socially sensitive.
“The bank is setting up mechanisms to enable its executives to make donations, confidentially where preferred, over the next three months,” said then-CEO Lungisa Fuzile, insisting the bank was committed to making a meaningful difference in the lives of the most vulnerable of South Africa’s society.
As it happened, the biggest remuneration knock came from the collapse in share prices across the JSE. Also, because of the sharp deterioration in economic activity, the banks were forced to increase their provisions for bad debts, which significantly hit profits.
But the banks chose to ignore the SA Reserve Bank’s request that “bonuses for senior executives should be put on hold during this period”.
In 2020 and 2021, despite not attaining performance targets, they paid out hefty short-term bonuses to their top executives. These weren’t for performance; they were for retention.
In its 2021 remuneration report, Nedbank explained the general position adopted by the banks, which was “the increased retention risk in the face of extreme Covid-19 volatility and uncertainty”.
The banks feared their top executives would depart in droves if they were not given bonuses, despite not achieving performance targets. There was no mention as to where all these executives would go, given the worldwide slump in economic activity.– Moneyweb.
Bongani Ndlovu
Online Reporter