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Deloitte Executive Compensation Report

Shareholder alignment, company performance and executive pay

Welcome to our fourth executive compensation report. This report covers several topics, including multiple years’ worth of executive remuneration disclosure and company performance data of the JSE Top 250 companies.

King IV™ and the requirements that it outlines for executive pay continues to stoke divergent views, even as firms have had a significant amount of time to digest the governance code.

The executive compensation debate has recently taken a dramatic turn with the arrival of the COVID-19 pandemic. COVID-19 is of significant concern to all stakeholders based on its immediate, and lasting impact, on society, the economy, businesses and employees.

At this juncture, AGM’s are still taking place, and remuneration policies and practices are still being disclosed and analysed by stakeholders. Disclosures overall pertain to 2019, and the impact of COVID-19 could not have been predicted, let alone reported on. We trust that this report will be useful in “benchmarking” current practice in executive compensation, while at the same time predicting and to a certain extent reporting on the developments in 2020. 

We hope that this report becomes the template against which actual performances and rewards for 2020 (the first year under COVID-19) can be compared to those of pre COVID-19. Implementation reports will contrast the company performance, executive reward characteristics pre COVID-19 and during/resulting from COVID-19.

Remuneration Policy disclosures should report on the immediate measures taken by companies, and the longer-term revised policies on executive compensation. The efficacy and acceptability of policy revision can be assessed by stakeholders next time round, and in the light then of a more informed view of the pandemic and its implications. 

We believe that the Single Figure metric, as required by King IV™, should be the basis on which all companies position themselves. This approach will allow for objective comparison while still ensuring flexibility in pay mix strategy.

We have seen increased disclosure around malus and clawback arrangements, which should address mal-performance and haul back executive pay where appropriate.

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