South Africa has historically high income and wealth inequality, and disclosing wage differential would mean that companies could no longer ignore these inequalities when addressing earnings. While the amendment bill does not regulate the compensation payable to top executives, the researchers believe that disclosing the ratios would provide companies and their shareholders with sufficient data to make informed decisions on executive pay.
High levels of executive pay have become a contentious issue worldwide, but stands out in South Africa where some top executives earn over R500,000 a day, compared to the average of R800 a day or the poverty line of R25 a day. In recent years, there has been a significant spike in shareholders of listed companies voting against high executive pay at Annual General Meetings, particularly in the finance sector.
Preliminary data on pay gaps in South Africa using the executive pay of some of the biggest listed companies on the JSE showed that some top-paid executives earn 200, 500, or even close to 1,000 times more than the average worker. The highest-paid executive in the data set was BHP Billiton’s Mike Henry, earning close to R740,000 per day, 949 times larger than the national average (R780 a day).
The new proposed laws also focus on other factors like beneficial ownership of a company and cutting red tape. The department aims to improve the ease of doing businesses in South Africa by cutting unnecessary red tape and making regulations clear, user-friendly, consistent with well-established principles.
Given the state’s wider push to combat corruption and money laundering, the government hopes to attract investors and make the local economy more effective and efficient, creating more jobs.
