Responding to reports that the Congress of South African Trade Unions (Cosatu) will encourage its member unions to balance wage demands with job security, the South African Reward Association (SARA) has applauded this move.
“This is a great step in the right direction,” says Dr Mark Bussin, Executive Committee member at SARA. “Executives and management could match this statement by showing pay increase restraint for themselves and articulating concisely what was achieved to earn bonuses. We need to strengthen the link for the average person to believe in the concept of bonuses.” The South African Reward Association shapes the industry and professionals that determine how people are paid or rewarded for the work they do. ENDS MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association
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Recent reports of Eskom executives awarding themselves R6 million bonus per person from a pool of R1.7bn has left a sour taste in the mouths of The National Union of Mineworkers (NUM). However, according to Dr Mark Bussin, exco member of the South African Reward Association (SARA), there are always two sides to a story. The trade unions are facing members on a daily basis regarding how tough it is to come out on one’s salary. “I think it is the next big wave to hit us – in work poverty (IWP). It affects more than half our workforce. People are struggling to come out on their salaries and they don’t understand what executives do to earn their millions. It causes resentment and anger amongst workers and creates a platform for radical elements, radical political parties and radical politicians,” says Dr Bussin. On the other hand, executives are under continual scrutiny, pressure, risk and forever increasing fiduciary responsibility. It is governance and onerous fiduciary duties that drives executive pay up and up. In Eskom’s case, they do run their business as a business should be run. However, with political interference setting unrealistic political goals and targets, it can put Eskom into the red. This is not entirely the Executive’s fault. Their original budget showed a profit, but the politicians, for example, instructed the electrification of several voter areas and they made a loss – not exactly their fault. “However, as right as the bonuses seem to the Eskom executives, there is a new word that I have coined called – the “optics” of remuneration. With rotating executives, blackouts, Medupi and general negative press – the optics don’t seem right to earn millions in bonus. This calls for wisdom and sensitivity on the part of Eskom executives. Accepting the millions is contentious and should be declined. Regardless of how lawful or technically correct the bonus calculation is. The optics aren’t right.” ENDS MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association Standard Bank and MTN Group Management Services were awarded top honours by the South African Reward Association (SARA) at the annual Reward Awards event on 7 November 2015.
The Reward Awards aim to recognise thought leaders that make a noticeable impact to business through reward strategies and practices that deliver business results and support the objectives of a company. “Reward professionals ensure that an employer does everything it can to attract, inspire and retain the best possible workforce, while still increasing profits year on year,” says Peet Kruger, executive committee member of SARA, a professional body that promotes and develops the reward profession and practices in South Africa. The three award categories recognise reward professionals, teams and organisations that have lead the way in promoting and developing the reward profession. Reward includes everything valuable to an employee in relation to his/her employment, including salary, benefits, and their experience of their workplace. Remuneration Report of the Year Award Standard Bank was awarded the 2015 Remuneration Report of the Year Award. Nominees for this category also included Anglo American Kumba Iron Ore, Aveng (Africa) Pty Ltd, Goldfields, Group Five, Impala Platinum Ltd, and Liberty Holdings Ltd. This award recognises organisations that apply the key reporting and disclosure principles and requirements stipulated by King III. Furthermore, the judging panel considers demonstrated commitments to best practice, and how the company’s approach to remuneration supports the business strategy, good governance and how it aligns the interests of its stakeholders. Reward Project of the Year Award MTN Group Management Services was awarded the first prize for the 2015 Reward Project of the Year. Second place went to Aveng (Africa) Pty Ltd, and third place was awarded to Siemens. Nominees for this category also included ArcelorMittal South Africa, BP South Africa, the Clicks Group, PPS Insurance, and PwC. This award recognises an individual or team for the development and implementation of a reward project that uses reward practices and principles in a manner that contributes significantly towards the achievement of the organisation’s objectives or success. Entries for the above Reward Awards are invited annually and judged independently by various experts in the reward industry, using criteria relevant to each award. President’s Award Dr Mark Bussin was awarded the 2015 President’s Award. This award is the prerogative of the President of SARA and recognises an individual that has shaped or significantly contributed to the ongoing development of the reward profession, or has been responsible for the design and implementation of complex reward strategies or programmes that have set the standard for best practice in South Africa or internationally. The winners of the 2015 awards were announced at the SARA Reward Awards Banquet. The event was sponsored by 21st Century, Remuneration Consultants, and Synntech People Solutions. For more detailed information on the annual SARA Reward Awards please visit www.sara.co.za ENDS MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association The importance of getting an executive remuneration policy right has once again been highlighted with the recent vote against the CEO and executive remuneration policy of South African food retailer Shoprite.
Investors voted against Shoprite’s policy arguing that the structure of the CEO’s package is mainly based on fixed remuneration and that there was insufficient provision for performance. Shoprite CEO Whitey Basson is paid just over R50m in salary and benefits. However, the fixed part of the package amounts to around R49m. Dr Mark Bussin, Exco member of the South African Reward Association (SARA) says executive pay is more complex than meets the eye. “A strategic take requires research that looks beyond how much executives earn.” This contrast of attraction, motivation and retention of good executives versus tough business control and media spotlights, place remuneration decision-makers in a difficult position. “Generally, executive pay in South Africa is linked to performance and our governance is on par with international standards,” says Dr Bussin. “The international trend of linking more of executive pay to performance is a good principle. Our executive bonus percentages are not out of line with international standards.” According to Dr Bussin, there are certain guidelines for setting CEO and executive pay. The most common factors to consider when devising a policy include the size of the organisation, the company’s performance, specific factors relating to the executives such as age, experience and career path, the structure of the organisation and job complexity. He adds that the remuneration committee must above all be able to defend their policy; there must be a direct link between the pay and the value that is delivered. One way of assessing a policy is to compare it to the market norm. Dr Bussin says “impeccable governance” is mandatory in the creation of a remuneration policy. “The board’s remuneration charter should acknowledge responsibility for setting the framework and reviewing the policy.” This requires all committee members to be aware of local and international trends relating to CEO and executive remuneration. It also requires constant engagement and a clear understanding of the company’s needs and future goals. ENDS MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association |
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