[South Africa] CEO v worker pay: the vertical pay gap

According to new research, the average lowest-paid worker in South Africa’s wholesale and retail sector would need to work for 21 months to earn what the sector’s average CEO earns in a single day, BusinessTech reports.

Using recent public disclosures, Just Share looked at employee and CEO pay at ten JSE-listed companies in the wholesale and retail space.

Shoprite Holdings, Pick n Pay, Pepkor Holdings, The Foschini Group, Woolworths, Mr Price Group, Dis-Chem, Clicks Group, Truworths International, and Spar Group employ 389,766 full-time employees and reportedly account for R833.7 billion in yearly revenue.

South Africa’s wholesale and retail sector is the country’s second-largest employer after the government and accounts for 17 per cent of the country’s workforce.

The CEOs of these companies earn millions, the lowest-earning employee earns considerably less. The average unweighted ratio between the total CEO remuneration and the total lowest earner’s remuneration is 597, so the average CEO retail and wholesale CEO earns 597 more than the lowest-earning employee.

Although it offers the highest internal minimum wage, Just Share found Woolworths to be the retailer with the highest vertical pay gap. Woolworths CEO Roy Bagattini earned R122 million for the 2023 financial year—far more than the R93,600 internal minimum pay. This creates a vertical pay gap of 1,308 years.

Shoprite was reportedly the second worst offender, with its CEO Pieter Engelbrecht earning R64.6 million, while the internal minimum wage is R65,263. This creates a vertical pay gap of 991.

Mr Price CEO Mark Blair earned R45 million while the average internal pay at the company was R64,537, creating a vertical pay gap of 711.

Pick n Pay was found to be the best performer. CEO Sean Summers’s pay of R10 million was 155 times more than that of the lowest-paid employee.

“While the sector undoubtedly plays an important role in employing to low- and semi-skilled workers,” Kwanele Ngogela - Just Share’s senior inequality analyst - said.

“It is nevertheless crucial to also recognise the contribution of the extreme vertical wage gaps which characterise these companies to the country’s overall high levels of inequality.”

CEO remuneration also extends beyond guaranteed pay, with short-term incentives (STIs), long-term incentives (LTIs), and other benefits making up a significant portion of CEO
remuneration.

With Mr Baggatini’s pay, for example, 60 per cent was linked to LTIs.

Legal changes

The Companies Amendment Act - recently signed into law by President Ramaphosa - is expected to be proclaimed soon. The new system will reportedly make vertical pay gap disclosures mandatory for public and state-owned companies.

Under it, relevant companies must share:

• The total remuneration received by each director and prescribed officer in the company;

• The total remuneration of the employees with the highest and lowest total remuneration;

• The average total remuneration of all employees, median remuneration of all employees; and the remuneration gap reflecting the ratio between the total remuneration of the top 5 per cent highest paid employees and the total remuneration of the bottom 5 per cent of the lowest paid employees.

Source: BusinessTech

(Quote via original reporting)

According to new research, the average lowest-paid worker in South Africa’s wholesale and retail sector would need to work for 21 months to earn what the sector’s average CEO earns in a single day, BusinessTech reports.

Using recent public disclosures, Just Share looked at employee and CEO pay at ten JSE-listed companies in the wholesale and retail space.

Shoprite Holdings, Pick n Pay, Pepkor Holdings, The Foschini Group, Woolworths, Mr Price Group, Dis-Chem, Clicks Group, Truworths International, and Spar Group employ 389,766 full-time employees and reportedly account for R833.7 billion in yearly revenue.

South Africa’s wholesale and retail sector is the country’s second-largest employer after the government and accounts for 17 per cent of the country’s workforce.

The CEOs of these companies earn millions, the lowest-earning employee earns considerably less. The average unweighted ratio between the total CEO remuneration and the total lowest earner’s remuneration is 597, so the average CEO retail and wholesale CEO earns 597 more than the lowest-earning employee.

Although it offers the highest internal minimum wage, Just Share found Woolworths to be the retailer with the highest vertical pay gap. Woolworths CEO Roy Bagattini earned R122 million for the 2023 financial year—far more than the R93,600 internal minimum pay. This creates a vertical pay gap of 1,308 years.

Shoprite was reportedly the second worst offender, with its CEO Pieter Engelbrecht earning R64.6 million, while the internal minimum wage is R65,263. This creates a vertical pay gap of 991.

Mr Price CEO Mark Blair earned R45 million while the average internal pay at the company was R64,537, creating a vertical pay gap of 711.

Pick n Pay was found to be the best performer. CEO Sean Summers’s pay of R10 million was 155 times more than that of the lowest-paid employee.

“While the sector undoubtedly plays an important role in employing to low- and semi-skilled workers,” Kwanele Ngogela - Just Share’s senior inequality analyst - said.

“It is nevertheless crucial to also recognise the contribution of the extreme vertical wage gaps which characterise these companies to the country’s overall high levels of inequality.”

CEO remuneration also extends beyond guaranteed pay, with short-term incentives (STIs), long-term incentives (LTIs), and other benefits making up a significant portion of CEO
remuneration.

With Mr Baggatini’s pay, for example, 60 per cent was linked to LTIs.

Legal changes

The Companies Amendment Act - recently signed into law by President Ramaphosa - is expected to be proclaimed soon. The new system will reportedly make vertical pay gap disclosures mandatory for public and state-owned companies.

Under it, relevant companies must share:

• The total remuneration received by each director and prescribed officer in the company;

• The total remuneration of the employees with the highest and lowest total remuneration;

• The average total remuneration of all employees, median remuneration of all employees; and the remuneration gap reflecting the ratio between the total remuneration of the top 5 per cent highest paid employees and the total remuneration of the bottom 5 per cent of the lowest paid employees.

Source: BusinessTech

(Quote via original reporting)