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Will the high remuneration packages of the board members of SOC, including executive directors will be (a) capped and (b) linked to performance

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Will the high remuneration packages of the board members of SOC, including executive directors will be (a) capped and (b) linked to performance
31/08/2012

Question for written reply

Question no.: 482

Date of publication: 31 August 2012

482. Mr K A Sinclair (COPE-NC) to ask the Minister of Public Enterprises:
Whether the high remuneration packages of the board members of the state owned enterprises, including executive directors will be (a) capped and (b) linked to performance; if not, why not; if so, when will the remuneration guidelines be (i) finalised and (ii) implemented? CW587E
Reply:

(a-b)(i-ii) The Department is in the final stages of developing new “Remuneration Standards” for executive and non-executive directors of state owned companies (SOC). The Standards will be informed by a set of guiding principles that will be rational, transparent and require consistent application by the SOC. 

This exercise has entailed considering various policy objectives such as the capping of remuneration for a reasonable period, until the gap between executives and ordinary workers have narrowed. SOC have a dual mandate, and remuneration, is a complex matter with many dimensions, that requires a fine balance between the State’s national objectives and the company’s commercial imperatives. A moratorium has therefore been placed on increases until such time the new Remuneration Standards have been adopted. Remuneration will be based on various multipliers such as economic impact, the company’s funding model as well as the complex environment within which the SOC operate. Performance must be measured and aligned to the Shareholder’s Compact.

The new Remuneration Standards will be enforced on the SOC with no deviation. The Department intends to finalise this work by October 2012 and begin implementation of these standards within this financial year. It is important that changes to existing remuneration policies be phased-in with the transition taking account of existing employment contracts.

Once approved, Parliament will be fully briefed on the new Standards and the implementation thereof.

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