I want to reflect in short on the salaries of executives and the remuneration of board members. It is nowhere more evident that excessive increases in salaries are being paid to executives than in an inefficient state-owned enterprise.
Eskom submissions in 2012 to the National Energy Regulator of South Africa called for a 16% electricity tariff hike each year for the five years ahead, up to 2017. This was done on the back of R36 million spent on staff parties and a 20-month schedule overrun - at an additional R60 billion - in the construction of boilers for the Medupi and Kusile power stations. Despite these inefficiencies, Eskom executives have seen generous pay increases. In the 2011-12 financial year, Eskom paid executive members 109% more than they were paid in the previous year. The Eskom chairperson then earned R113 500 for every board meeting he attended.
In the case of Transnet, nonexecutive directors were paid R8,1 million, up by 40% from 2011. In 2012, the chairman earned R125 000 per board meeting attended, while the chief executive officer took home R6 million a year.
The board members of state-owned companies are serving on too many boards. The Minister and department should regulate the number of boards that they could serve on at any point in time.
Clearly, something went horribly wrong with our state-owned enterprises' remuneration framework. The SOCs are insulated from failure. They are not allowed to go insolvent because government ... [Interjections.] ... generally bails them out.
Furthermore, if they fail, the option of a takeover bid, which may be viable for private companies, is also out of the question. This means that the boards and management may slump into complacency. Thank you. [Applause.]