South African business owners voice concerns about executive remuneration
13 August 2012 | Category: International business report, News
68% of South African business owners believe that executives at large public companies are paid too much – a sentiment that is shared by global and BRIC counterparts, which scored 66% and 70%, respectively.
This is according to a global survey of 2,800 public and private businesses in 40 countries in May and June 2012 as part of the Grant Thornton International Business Report survey.
“Consensus from business leaders around the globe is that executive compensation is too high, which pinpoints an important issue amidst challenging global economic circumstances,” says Jeanette Hern, partner and head of corporate finance at Grant Thornton South Africa.
The survey revealed business leaders’ need for greater oversight, transparency and accountability in public companies from both a local and global standpoint.
Separation of roles was also of considerable concern globally, with 90% of South African respondents saying that the roles of CEO and Chairman should be held by different people to ensure greater oversight, compared to 80% globally and 88% in BRIC countries.
For each question in the survey, South Africa scored higher than its global and BRIC counterparts, highlighting local business leaders’ significant concern over insufficient oversight measures and issues related to executive remuneration.
85% of South African business leaders agreed that shareholders should have greater involvement in establishing remuneration policies for senior executives at public companies, well ahead of the global response of 67%.
Again, most South Africans responded “yes” when asked whether large public companies should disclose the remuneration policy and individual remuneration of directors (87%), ten percent higher than the global average.
“Investors have been hurt by the crises and tough global economic conditions characterising the past five years,” says Hern, “They want to know how their money is being spent and whether executives’ remuneration is in line with performance.”
This is especially true in Greece, where 100% of business leaders surveyed said that remuneration should be closely linked to performance, unsurprising in light of the country’s economic collapse and ongoing sovereign debt crisis.
South Africa was not far behind with 96% of respondents agreeing with Greek counterparts that executive pay should be directly linked to performance, compared to almost 90% globally and 92% in BRIC nations.
“In South Africa and abroad, public companies will face growing scrutiny from the community, investors and industry. These businesses need to ensure that their policies are known, understood and transparent, and that reward can be justified by performance,” she concludes.
Video: Jeanette Hern discusses #GTIBR research on executive pay on bit.ly/PlCl9V @abndigital @cnbcafrica
— Grant Thornton (@GrantThorntonZA) August 15, 2012
Public company policies should be known, understood & transparent, reward based on performance – Jeanette Hern #GTIBR bit.ly/GTexecpay
— Grant Thornton (@GrantThorntonZA) August 13, 2012
Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 12,000 businesses per year across 40 economies. This unique survey draws upon 20 years of trend data for most European participants and 10 years for many non-European economies.
Data collection
Data collection is managed by Grant Thornton International’s core research partner Experian, primarily by telephone. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis.
Sample
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 2,800 businesses from all industry sectors across the globe conducted in May/June 2012. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.
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About Grant Thornton South Africa
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Jeanette Hern
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TO WHOM IT MAY CONCERN
I lecture in HRM at UNISA and am very much interested in the survey you have done entitled ‘South African business owners voice concerns about executive remuneration’.
Will it be possible to provide me with the complete report and the questionnaire that was used.
Your kind cooperation in this regard is highly appreciated.
Regards
Prof Johan van der Westhuizen
Dear Prof. van der Westhuizen,
Thanks for your enquiry. We have sent you information via email.
Kind regards
Nico