Performance formula as clear as mud

Lack of transparency on the calculation of performance bonuses, the setting of targets for executives, and companies' remuneration policies remain causes for concern, says shareholder activist Theo Botha.

While some companies publish their remuneration policies, as required by the King III codes of good corporate governance, this is "absolutely meaningless", says Botha.

The codes require companies to put remuneration policies to non-binding vote by shareholders.

If votes go against them, companies should consult shareholders and make changes, says Botha.

Remuneration policies should guide shareholders on how bonuses are derived, what the caps are and what annual targets are.

"Shareholders should know beforehand that the target is a 10% growth in earnings per share, for example, and that the bonus will be calculated based on that," Botha says.

But company performance and executive pay often have little to do with each other. Questions can also be raised about the size of pay packages in relation to the size of the company.

The golden handshake of Mvelaphanda Resources' Pine Pienaar ahead of the company's unbundling boosted his package to R62.87-million. Others who earned multimillion-rand golden handshakes to leave were Brad Mills, former CEO of Lonmin; Khaya Ngqula, the ousted CEO of South African Airways, and Super Group's Larry Lipschitz.

Mills got R19.5-million to go immediately after he was criticised for his management of the company, which was apparently conducted mainly from London.

Under his reign, Lonmin's platinum production fell and there was an exodus of management. Mills's total package last year was R19.7-million; in 2007 it was R19.20-million and in 2008 it was R27.2-million.

Ngqula, who is facing legal action for alleged unlawful spending at the airline, took home R13.7-million last year, making him the best-paid public-sector executive. This included a R3.8-million salary, benefits of R470000 and a termination bonus of R9.4-million.

Lipschitz, who got a performance bonus of R5-million in 2008 for managing Super Group into serious trouble, was paid R6.4-million to leave last year.

His package was R12.9-million, including a salary of R4.55-million. He was paid R8.4-million in 2007 and R10.9-million in 2008 for his services.

Quantum Property, a little-known company, pays out remarkably high benefits, with executive Chaim Cohen's package totalling R20-million.

Gary Itzikowitz, a colleague of Cohen's, was paid benefits of R13-million.

Other eye-watering amounts include those of Vodacom SA CEO Shameel Joosub, who was paid R10.5-million in benefits and R8.3-million as a performance bonus.

Joosub's total package was R22.3-million, more than double that of his boss, Pieter Uys, who took home R10.5-million in total, including benefits of R482000 and a performance bonus of R5.6-million.

Geoffrey Qhena, CEO of the Industrial Development Corporation, was the best-paid executive in the public sector who still has his job. He took home R10.3-million last year, including a bonus of R6.9-million.