Thank you, Deputy Speaker. I am not introducing this Thursday debate to make more enemies, but to put this issue firmly on the agenda as a sincere attempt in this country with its wounded past and the huge gap between the rich and the poor not to ignore what is happening in certain sectors of society, which in many instances borders on poor board decisions and greed. Since the recession, all over the world the executive pay issue has been put under the spotlight. What is happening here in our country?
Dr Phillip Theunissen concluded a fascinating study in 2009 under the heading: Is executive remuneration out of control? Of his main findings is that public opinion polls consistently show that they think - and that is the perception - that chief executive officers' remuneration is out of control. Some of his findings are that in 2009 the average remuneration of a CEO in South Africa was R4,8 million. That is 36 times more than the average worker!
Despite the severely negative economic conditions after 2008 CEOs were still able to double their normal annual earnings with performance bonuses. He further found that the performance of individual companies is by no means a determinant of the CEO's remuneration.
The bottom line is that the current levels of CEO remuneration in all sectors are sending out the wrong message regarding fairness to the average worker and the ordinary South African. The annual basic salary of a CEO in the private sector over three years, 2006 to 09, rose by 59,6%.
What has happened in the public sector? Let's come closer to home. Over the same time the President's salary rose by 70%; a Minister's by 73,5%; a Member of Parliament's by 50%; a Premier's by 65%; a Chief Justice's by a whopping 134,7%; a judge's by 70%; a director-general's, shall I say by "only" 26%; and a cleaner's by 25%. This has led to a state wage bill now consuming almost 40% of the total budget. The average salary in the public sector is now 28% higher than in the private sector.
CEOs in state-owned enterprises, SOEs, now earn more on average than their counterparts in the private sector. Something had to give way, and it did. The freezing of the Cabinet Ministers' salaries was a good start and the President must be applauded for that. In 2009 a moratorium was put on the executive pay at SOE level. They do not like it, but some of them are still paid huge salaries and bonuses, with dismal performances.
For example, the two highest-paid executive committee members in SA Airways got R6,5 million and R9,1 million respectively. I am not even referring to the CEO. The SA Broadcasting Co-operation's company secretary earned R4,3 million last year. Telkom's CEO was paid R12 million and the chief financial officer, CFO, of the same company R8,3 million. So, I can go on! The nonexecutive Chairman of that company was paid R1,5 million just to call meetings. Municipal managers and mayors earn more than the President and Premiers of their provinces. Private fund managers who operate below the radar in the private sector earn millions. Let me put these salaries into perspective.
According to Statistics SA, 63 000 individuals earn more than R1 million per year in South Africa. Just over 2 000 earn more than R5 million per year. Thirty-six thousand taxpayers received share options totalling R6 billion 2011. In the same year, the top 612 executives pocketed share option benefits totalling R2,4 billion.
One example must take the cake, though. The CEO of a very well-known media house in South Africa totally outclassed his board of directors and the remuneration committee of that company, offering to work for them without earning a salary, but instead he wanted share options, that are now worth R6 billion, for one person! Share options are an important tool as incentives when applied correctly, without an element of greed.
The company, under his guidance, performed excellently and made many people and institutions rich. However, there must be a limit, and the board was wrong not to cap the share option. This is sending out the wrong signal.
So we all need to rethink what we are taking from the state or our companies. Eventually it is the taxpayer and consumer who pay these salaries. Let's tone down expectations for the sake and the survival of this country. [Applause.]