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Maybe we’re not all in this together

The reality of course is that we aren’t – many are battling for enough food to stay alive.
Executive remuneration, particularly in banking, is starting to feel the effects of peer pressure. Image: Moneyweb

It was difficult not to feel sorry for Absa last week. Like every other company on the JSE, it is committed to long-term contracts with its executives and has no choice but to ply them with previously agreed generous salaries and share awards.

Read: One for the people, and 10s of millions for the executives

This means the bank will be just the first of a long list of companies to disclose rather lavish executive share allocations during the coronavirus crisis. Standard Bank should be releasing similar details any day now.

Perhaps this is why the banks were so slow to respond, first to the SA Reserve Bank’s urging on dividend payments and executive bonuses, and then President Cyril Ramaphosa’s pay-cut ‘suggestion’.

For a remarkably long time – in the context of the lockdown’s freezing of time – they held out, seemingly unaware of how tone-deaf they appeared.

Standard Bank is not reducing anyone’s pay as a result of the pandemic, a spokesperson told Moneyweb on April 1.

“The bank’s remuneration committee aims to ensure that executive remuneration is externally competitive, fair and responsible and the committee is cognisant of the current extraordinary efforts by management to act in the best interests of our customers, our people, our shareholders and society at large, at this challenging time,” said the spokesperson, echoing the sentiments of most of the big banks.

It remained committed to that stance until April 12.

Nedbank’s Mike Brown was the first to break ranks in a commendable move that eventually forced ‘buy-in’ from all the big banks.

The reality of course is that we’re not all in this together – many are battling for enough food to stay alive, some of us are battling for our livelihoods, while a lucky few are battling for their contracted share awards.

Need for scrutiny now even greater

This means there is now even greater need for close scrutiny of remuneration policies and practices, which makes it all the more critical for the JSE to enforce reasonable engagement standards when it comes to companies hosting their annual general meetings during the lockdown. There must be no tolerance for the sort of AGMs announced by Anglo American and Mondi.

Companies with their primary listing on the JSE should be required to use the sort of interactive electronic platform made available by the exchange in conjunction with The Meeting Specialist.

Now is not the time for boards to be avoiding uncomfortable and probing questions from shareholders.

The notion that the world will be fundamentally changed by the coronavirus and the comprehensive response it triggered has probably been overstated. After all, not a lot has changed since the 2008 global financial crisis.

Certainly more bank-related regulations have been introduced across the globe but on the critical issue of the allocation of the value created by the economic system, there hasn’t been too much change. The dominant characteristics of that system remain excessive levels of executive remuneration, massive share buybacks and increasing inequality. All of which has been accompanied by a growing sense of frustration and anger among those left behind.

Coronavirus could be a game-changer

Remgro chair Johann Rupert, who has long believed that the free-market system is not working as it should, thinks Covid-19 could be a game-changer. “This isn’t just a pause, it’s an entire reset of our economic system,” Rupert told the Financial Mail recently.

That may be, but the last time there was a fundamental change in the global economic system was after the utterly destructive Second World War (WWII).

Too often the majority of us just want to return as quickly as possible to whatever looks like normality – no questions asked.

Talking about Remgro, its decision not to vote on RCL Foods’ repurchase of 14 million shares from executives is to be commended. The decision was taken in the wake of some vociferous opposition by shareholder activists who were not only concerned by the uniquely favourable treatment being granted to the lucky executives, but angered – given their chronic underperformance – that they were in line for any sort of bonus. Mind you, allowing for the general level of shareholder apathy, there’s still a good chance the repurchase resolution will get the necessary votes to go ahead.

Discovery has implemented a number of useful initiatives since the Covid-19 crisis reached our shores, so it’s rather sad to see the sustained pounding suffered by the share price. It has recovered from the recent low of R54.50 but CEO Adrian Gore’s derivative position continues to look remarkably uncomfortable. On Friday the company announced that 18.6 million of his shares – valued at R1.7 billion – had been pledged for the funding of R303 million worth of preference shares.

Bidcorp’s trading update for the nine months to end-March provided a useful perspective on the impact of the coronavirus across a range of markets from Europe to Africa, to Australasia and China. While China looks to be in recovery mode, Bidcorp was expecting worse to come in most other regions.

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We definitely are not in this altogether.

The first thing landlords want is 100% of their rent paid even if 70% of tenants can’t trade.

Schools want 100% of the fees paid even though the learners are at home not being taught.

Insurers want 100% of short term premiums paid when the cars are not being driven.

Everyone wants not just what they had before but they want their mentally banked bonuses and annual escalations.

Public sector workers (of which we need 70% less of) just want to strike for above inflation escalations.

The UIF doesn’t have the money to pay relief and cannot handle the volume of queries dud to massive unemployment.

The only people saying that we are all in this together are those who are getting paid and companies milking it for the PR it offers.

We are not in this together.

The time for monopolistic corporate buls&it to stop and get very very real.

Well said and totally agree.
And to really rub salt in the wounds on the eve of ABSA’s generous Incentives my wife’s contract was abruptly cancelled after 6 years hard work and dedication at an AVP level. Right in the middle of lockdown where her capacity to look for a job is zero. Bastards. R110m (and it also does not help that is was only the pigment impaired team that got bulleted – not the new dispensation!!).

No. Do what u agreed to do. No excuses.
This is why I don’t lend to people without hard surety down. Not having money is no excuse to not pay….. Do what u agreed to do when u signed up… If not don’t cry about the penalties. Don’t ever forget.. The penalties had
To be included into agreements just for people like u. Do u think it’s wrong and unjust that I’m protected against people like u?

You are clearly one of the examples that Africa Pragmatist used above.

There has been a lot of debate around if this experience will change attitudes for the better and make the world a better place for all. I have disagreed because “people like u” will always still be around.

A lot said on the previous article on SAA about the unions only coming to their senses because when there is no money, there is no money. Something you clearly do not understand. By throwing the book (your worthless contract) at someone will not even get you a cent.

From your comments it seems that you are one of the “visionaries” that saw this coming all along and that is why you are in this industry, why you had these clauses in contracts
….. blah blah blah.

Just a note here, I get it that some will be “better off” than others but I can assure YOU that this will be detrimental to all of us.

Agreed and cannot emphasise the power of PR here. Talking of Insurers wanting their full premiums.

Had a business break in last week, you should already hear the excuses coming through and reasons not to pay. What about SASRIA that is loaded onto every policy in the country for years without any big event and now comes time to pay, lets see what happens.

Just saying we all pay for this trash for years and are promised heaven on earth from the MBA’s running these places until such an event happens. WE ARE DEFINITELY NOT ALL IN THIS TOGETHER.

What does having an MBA have to do with anything?

The inequality of south africa is being laid bare for all to see…but no worry…a cabbage, can of pilchards, oil, washing powder and a loaf of bread will tide the massess through. Welcome to a better life for all.

More like a Bitter Life for Some………

And The only reason ud be unhappy with yr can of pilchards and baked beans is cause u know that someone up on top of the hill is busy eating caviar…… This is also called jealousy. I’m not responsible for others emotions.

When CEO’s start using derivatives in relation to their own companies then you know that something is mightily wrong with the situation. I don’t know the details but have long believed that Discovery is all about profit and ego and not much about health.

You got that right.

But remind me again what the first rule of any business is??
U welcome to go start yr own…..

A lot of the actions taken so far is quite similar to actions taken during the Great Depression. Except they seem to think a depression can be diverted in a couple of months.

Don’t think so.

Dow peak in 1929 was on 3 September 1929 at 381.17. This level was only achieved again on 23 November 1954.

Dow bottoms out 8 July 1932 on 41,22. 89% below the high of 1929.

I have a funny feeling a lot of amo has been used and we might have nothing when we need it.

It is now becoming obvious to the whole world that South Africa is naked when the tide goes out. Pictures of starving people waiting for food parcels which don’t arrive ,on sky tv indicate that the ANC govt has done very little to help raise the living standards of a vast number of their constituents. The callous missallocation and theft of the taxpayers money has created a poverty stricken landscape , luckily there are many good and generous people who are trying to donate money and food to help local communities survive. These are the real local heroes along with the health care professionals.

End of comments.

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