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Who did better – bank execs or shareholders?

Returns versus executive remuneration over the past decade.

There exists a school of thought that (especially bank) CEOs are substantially overpaid for the work they do. One might even say this criticism is fair in a season of rampant value destruction and poor capital allocation among public companies.

The Twittersphere was abuzz last week when Sasfin’s David Shapiro cited Financial Mail money editor Giulietta Talevi, who mentioned that Standard Bank’s executive and non-executive remuneration had soared by 890% over 10 years. Contrast this with a reported total return of 161% over the same period. (Talevi then clarified her calculation and said that when taking share rights into account, the increase was 671%.)

However, 280 characters cannot tell the whole story. For one thing, in 2009 Standard Bank disclosed the remuneration of only two executives: then CEO Jacko Maree and then financial director Simon Ridley (before that, it only reported on one: the CEO). Contrast this with 2018 when it published details for six executives. The board still comprises 19 directors, but sub-committee fees are an increasing portion of fees paid to non-executives.

Let’s start with the total returns of the five retail banks in the past 10 years.

Total returns 2008 – 2018


5 002.04%





Standard Bank


Absa Group


* Sasfin helpfully provided this data, measured from December 31, 2008 to December 31, 2018.

* Investec is excluded from this exercise as its remuneration is in pounds sterling.

How did remuneration paid to executives increase across over the same period?

For the purposes of this comparison, only guaranteed or fixed pay and benefits as well as bonuses or short-term incentives were used.

This rather obviously excludes a large portion of an executive’s remuneration, particularly at a bank. However, long-term incentives – whether these are phantom shares, share appreciation rights, share options, or performance-related shares – are complicated. One cannot simply take the number granted or, indeed, exercised in two arbitrary years. Awards given in a single year for performance will typically vest over a period of time. And even then, those are subject to additional criteria or hurdles.

Base pay plus short-term incentives





Absa Group CEO

Maria Ramos1


Maria Ramos



Absa Group CFO

Jacques Schindehütte


Jason Quinn



Capitec2 CEO

Riaan Stassen


Gerrie Fourie



Capitec2 CFO

André du Plessis


André du Plessis



FirstRand3 CEO

Paul Harris


Johan Burger



FirstRand3 CFO

Johan Burger


Harry Kellan



Nedbank CEO

Tom Boardman


Mike Brown



Nedbank CFO

Mike Brown


Raisibe Morathi



Standard Bank CEO

Jacko Maree


Sim Tshabalala



Standard Bank CFO

Simon Ridley4


Arno Daehnke



1 Appointed March 1

2 For Capitec, the years to March 2010 to March 2019 are used

3 For FirstRand, the year to June 2009 and June 2018 are used

4 Appointed June 30


Returns vs executive remuneration 2008 – 2018


Total return on the JSE


Increase in base pay plus short-term incentives

Absa Group







5 002%

















Standard Bank






This simple comparison shows that while Absa Group lagged its rivals when it comes to total return over the past decade, the increase in remuneration paid to former CEO Maria Ramos comfortably exceeded the returns generated.

At Standard Bank, the remuneration of CEO Sim Tshabalala last year was 505% higher than that of then CEO Jacko Maree in 2009. This is more than double the total return delivered over the 10 years of 233%.

While the remuneration of former FirstRand CEO Johan Burger was 227% higher than that of Paul Harris a decade ago, the banking group has delivered a total return of nearly three times that.

At Nedbank, with more modest increases in remuneration of both the CEO and CFO over the decade, the total return of 356% also comfortably exceeds the increase in pay. 

And with Capitec’s astonishing total return of 5 002% over the decade, it would be near impossible for the increase in CEO pay to come anywhere close!

Future comparisons

It is worth noting that this comparison would be distorted if the new single-figure method of disclosing remuneration is used. For this, the value of any long-term incentives vesting are disclosed as part of remuneration for the current year.

In the case of Capitec, for example, CEO Gerrie Fourie’s remuneration would be more than R78 million higher due to awards from prior years that vested. These are measured against the year-end share price but have not actually been exercised.

One must therefore ask whether this is an accurate way to measure remuneration within a given year.

Even so, the increase in remuneration at Capitec would be approximately 1 000% if the ‘single figure’ for Fourie is used in the most recent year (understandable, given that so much is tied to the value of the bank’s share price).

A similar comparison for Standard Bank using the ‘single figure’ would yield a result of 892%. But Maree’s remuneration in 2009 was less than half of what he had been paid a year prior. This further highlights the limitation in using just two arbitrary years as the basis for comparison.

One way to more accurately measure this would be to compare the total reward paid to an executive across their tenure (including the value of all vested and exercised long-term incentives) with the bank’s total return across that same period.

A ratio of the two – rands per percentage return generated (or rands vs increase in return on equity?) – would provide a better basis for comparing bank performance  and the remuneration of their leaders.

An exercise for an upcoming vacation, perhaps?

Hilton Tarrant works at YFM. He can still be contacted at

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Interestingly when I looked over it fast my very 1st impression was your conclusion ie what about longer term incentives and totals over time as for many, the annual figure is actually not where most execs make most of the money but rather via bonus and stock options which is what makes them better paid than ordinary staff.

Additionally it’s tough to compare a ceo which is part of founding ? As they typically have highest growth in income directly and indirectly much like the share price when successful (reminds me of Naspers, Shoprite..)

Nice article!

Executives run businesses for the benefit of shareholders?

Um, executives run businesses for the benefit of stakeholders?

Course not. Executives run businesses for the benefit of executives. That’s the right answer.

There, wasn’t so difficult.

Maybe the correct calculation of any executive’s remuneration should be calculated as a percentage of the company’s turnover/profit/staff size. Definitely do these executives earn a fortune, but the manage big and complex companies. If their salaries are fraction of turnover/profit/growth/etc. it does not really matter.

Look most can not even influence the destiny of the big behemoths, yet they always share in the upside, not the downside.

Do they pay back their salary when the business fails?

The big failures are always shared with the tax payer, while these monkeys leave with their money..”hard earned”..

I agree, having run my own business for 20 years ( albeit a mickey mouse size comparatively) I just do not see the value of one person equated to 30 mill a year when you have thousands of employees, specialists, consultants, etc, etc to add to the value. What does a bout of flu cost the shareholder??? Heaven forbid he’s not going through a divorce or suchlike and his head is not in the right space for awhile!!! Jokes on us shareholders for sure, tail’s wagging the dog!

Investors as a whole need to take a serious look at the hired help compensation. Unfortunately most shareholders have abdicated their obligations to the hired help at the professional investment management industry. The hired help run compensation committees that ALL believe their firm has to pay in the top quartile because they deserve the top quartile execs. I know math and what happens when ten firms all have as a goal to pay in the top quartile.

please don’t tell me how all these people could be earning $10m anywhere in the world. Their gene pool is not as good as they think – our internationalization failures prove as much.

btw, one has to count share schemes, the hired help certainly does!

Extreme socialism and extreme capitalism are equally bad – The guys at the top just become more greedy! Socialism is the ultimate form of capitalism – only a few at the top have extreme wealth and the rest have nothing.

question is – where did some senior bankers matriculate? gardens commercial high in cape town? were some of their subjects – shorthand/typing & home economics? does this qualify you to be head/global head of forex???

Shareholders have no one to blame but themselves….

They undervalue these companies yet Execs and the boards pay themselves according to true intrisic value of those organization.

If shareholders can trade the company shares mirroring the remuneration of these Exec, they too would be in the money.

Hi Hilton
The issue of remuneration and returns is very problematic. Are CEO’s paid as a result of returns or at the same time as returns? In other words, do salaries or bonuses lag results or not?
Then, to compare the increase in a CEO’s returns over a period with shareholder returns over the same period is potentially distorted for several reasons. Firstly, did they start from the same base? What if the CEO was already being paid an excessive salary at the commencement of the period? Perhaps the increase (return) was not as great but the excess was always there. Secondly, you have to deal with the “rising tide” effect when CEO’s are rewarded (via share options, say) merely because the market rose over the period and not because they were excellent CEO’s (one only has to look at the total CEO earnings of some resource companies to see the issue here).
In my opinion, comparing the rate of increase in a CEO’s remuneration with a return to shareholders is really pretty meaningless if you think about it. Far better would be to compare all CEO’s with each other based on a number of measures: total assets under management, staff numbers, ROA or ROAM, ROE (all “hard” measures) and then some soft measures such as customer retention rates, staff turnover, changes in market share, environmental impact, to name a few.
Finally, and this was alluded to below, it is easier to take a bank’s profits from R100 to R200 than from R100 million to R200 million, so you have to somehow take the stage in the life-cycle into account.
This kind of analysis is a perennial with business school students, so perhaps a trawl through some of the research reports produced over the past few years at some of the better business schools might produce some interesting ideas.

This is wrong on so many levels.

One quick example…

ABSA (given it looks so bad in this article)

Market cap 1 Jan 2008 – R74.5bn
Market cap 31 Dec 2018 – R134.5bn
Thats an absolute growth of R60bn…

CEO and CFO pay in 2018 – c. R50m… x 10 (for 10 years – I am too lazy to actually calculate the cumulative pay) = c. R0.5bn

So that’s R0,5bn of pay to guide R60bn of growth…. 0.8%….

The alternative is you pay someone R4mil a year and you’ll get R4m worth of effort – which doesn’t go a long way…

Bottom line… you get what you pay for… pay less, you’ll get less.

I believe revenue growth to be a more pertinent measure of management performance than market cap. ABSA had 62% revenue growth in the ten years you reference.

I forgot to mention total inflation over the same period was 76%!!

Perhaps a better place to look at listed company remuneration would be to look at some of the smaller companies. There at times the CEO gets R10m and his staff of 300 get R2m to share and the business makes at R1m profit for the shareholders.

Now there’s something fishy.
I think as someone running my own business that listing is a way for the execs who are required by JSE to step in and just rob the business.

No one deserves R10m per year for steering the ship if they dont have their own money and aren’t taking all the upside and downside risk.

Downside being the key risk!

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