State's top packages frugal by comparison
February 18, 2005
By Lynda Loxton and Renée Bonorchis
Cape Town - Government pay packages, from the president and his ministers to central bank office bearers and the heads of parastatals, are much more modest than those company directors are taking home despite the high levels of responsibility taken on by the country's leaders.
In October last year the independent commission for the remuneration of public office bearers recommended that the remuneration, benefits and allowances for all categories of office bearers should be raised by 7 percent, but the following month President Thabo Mbeki, in line with inflation targeting and mindful of recent protracted negotiations over teachers' salaries, trimmed this rise to 6.2 percent.
It had been proposed, for example, that deputy president Jacob Zuma's basic salary be raised to R702 993 a year, with his car allowance rising to R175 735, for a total package of R878 673. In the event, Mbeki adjusted his basic pay to R696 369, car allowance to R174 092 and total package to R870 461.
In the case of ministers, the commission had recommended that the most senior and long-serving ministers, such as finance minister Trevor Manuel, should get a basic salary of R639 034 and motor vehicle allowance of R159 758, giving them a total package of R798 792.
Manuel and Mbeki, through fiscal discipline, have achieved a growing economy where gross domestic product trends are healthy, interest rates are more favourable than they have been in 23 years and inflation is benign.
There is more in the coffers than ever before for social spending and it would appear as though the economy is finally, albeit slowly, creating jobs.
Despite this performance, Manuel, like Mbeki, trimmed his salary to a basic of R633 061 and car allowance of R158 265, giving a total of R791 326.
For junior ministers, or those only appointed after the last elections, the commission had recommended a basic of R472 178 and a car allowance of R118 045, giving a total of R590 223.
Mbeki cut this back to a basic salary of R467 765 and car allowance of R116 941, giving a total package of R584 706.
The central bank pays better.
Reserve Bank governor Tito Mboweni said last year he and his three deputy governors received pay increases of about 4.5 percent for that fiscal period, the mid-point of the inflation target set by the national treasury.
The central bank has now successfully maintained consumer inflation within the target range of 3 to 6 percent for 16 consecutive months.
For the 12 months to March last year, Mboweni was paid R2.59 million, including salary and retirement and medical benefits, an increase of 8.8 percent from the previous year. The bank did not give details of Mboweni's pay in this fiscal year, except to say it would increase by about 4.5 percent. The governor and his deputies do not receive incentives, such as bonuses, over and above their salary and benefits.
It would appear that parastatals pay even better.
Examining Maria Ramos's pay package is difficult without referring to that of her predecessor as chief executive of Transnet, Mafika Mkwanazi, who resigned in March last year.
In 2004 Mkwanazi received a total remuneration package of R4.4 million plus a performance bonus of R1.7 million for the financial year to March 2003. Of the remuneration package, just over R3 million was in the form of salary, R1.3 million in retirement fund contributions, R31 000 "other contributions" and R44 000 "other payments".
During her period in the top post during the 2004/05 financial year, Ramos received a salary of R943 000, retirement fund contributions of R54 000 and "other contributions" of R17 000.
The annual report said Ramos was on a three-year contract expiring in October 2006. Her contract includes a notice period of four months and a restraint of trade period of two years from the date of termination of service.
On exiting, she will be entitled to a termination benefit equal to one year's guaranteed remuneration. Other benefits include a performance bonus of 25 percent of guaranteed remuneration, medical aid scheme benefits and travel concessions.
At Eskom chief executive Thulani Gcabashe received a total package of R4.9 million for the financial year to December 2003.
This was made up of a salary of R1.9 million, bonus and related payments of R2.3 million (of which a third was paid out and the rest banked for payment later), contributions of R402 000 and an expense allowance of R281 000. He was also given a housing loan of R1.3 million.
But privatised former state assets may well be the best remunerators of all. As you can see from the table, the total package of Telkom's chief executive, Sizwe Nxasana, soared from just over R4 million in 2003 to more than R11.1 million in 2004.
In fiscal 2003 Nxasana oversaw the successful dual listing of Telkom in Johannesburg and New York. In that year Telkom was the western world's best-performing telecommunications stock.
His 2004 package was made up of R1.9 million in remuneration, R8.2 million in a performance bonus and just over R1 million in fringe and other benefits.
The latest annual report said Telkom used "independent remuneration consultants to advise the remuneration committee of the board of directors on the remuneration of executive management.
A remuneration level is determined and benchmarked against those of peer groups in the market.
"The remuneration committee is satisfied that fair remuneration practices are followed, and that executives are being remunerated in line with the market."
The only peer for Telkom on the JSE Securities Exchange is MTN Group, whose chief executive, Phuthuma Nhleko, is one of the highest-paid company directors in South Africa. He received R13.8 million as a basic package in MTN's latest fiscal period.
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