By Siphosihle Nongogo, CGISA Technical Manager

At the beginning of 2026, data revealed that executive managers and directors have the highest earning power, with salaries ranging from R83 000 to R125 000 per month. This stands in stark contrast to the average salary paid to formal, non-agricultural workers during the same period, which was R29 997. Further, it was reported in 2024 that, in some industries, the CEO earned 597 times the income of the lowest-paid employee. At that ratio, a low-paid employee would have had to work almost two years to earn what a CEO earned in a day.

These figures are staggering and are further exacerbated by the prevailing inequality and unemployment in our country, which has made South Africa the most economically unequal country in the world.

It is no surprise then that Parliament enacted sections 30A and 30B of the Companies Act 71 of 2008, which require all public and state-owned companies to prepare and present a shareholder approved remuneration policy every three years and an annual remuneration report.

Of particular importance is the remuneration report, which must disclose the highest and lowest total remuneration, average total remuneration and the pay gap between the top and bottom 5% of employees. This is a profound step in ensuring transparency in both public and state-owned companies. It will be argued in this article that CEOs and executives cannot justify multi-million-rand salaries while employees struggle in economically tumultuous times.

Executive remuneration is a corporate governance issue

It is no secret that we live in hard economic times. Not only is the regional conflict between Iran, Israel and the United States of America putting strain on our oil reserves, but people are facing real economic hardships in the rising cost of living. Many South Africans live far from economic centres and many feel the impact of the weak economic growth in the country. Companies are also feeling the pinch; with growth tagnating and profits being marginalised as a result. In this economic climate, however, we still see executives taking home huge salaries.

Fair and equitable remuneration has always been a fundamental principle of good corporate governance as expressed in the IoDSA King V™ Code on Corporate Governance for South Africa 2025 (“King V™”).

Principle 11 of King V™ requires that the boards of directors ensure that their company remunerates fairly, responsibly and transparently in a manner that supports sustainable value creation. Further, in terms of King V™, the board is held accountable for ensuring fair, responsible and transparent remuneration at all levels of the organisation. Recommended Practice 113 (c) of King V™ requires the board to approve policies that have an objective to promote fair and responsible remuneration of executive management compared to overall employee remuneration. King V™ does not encourage executives being paid exorbitant fees at the expense of low-paid employees, especially in tough economic times.

The disclosure and fairness of executive remuneration is not something novel to King V™. Sections 30(4) and 30(6) of the Companies Act 71 of 2008 (“Companies Act”) require that directors’ remuneration be disclosed in a company’s annual financial statements. This ensures transparency in director remuneration for all stakeholders to review. And, through regulation 38 of the Companies Act, this has been extended to prescribed officers.

Furthermore, section 58(3)(b) of the Companies Act requires that companies disclose directors’ and prescribed officers’ remuneration in any prospectus offering the sale of shares to the public. Companies listed on the Johannesburg Stock Exchange (“JSE”) are also required, by the JSE Listings Requirements, to disclose the remuneration and benefits received by company directors.

Ultimately, executive remuneration is a governance issue that should be managed effectively by the board. However, we cannot ignore that executive remuneration is impacted by several factors, such as whether the company is listed on the JSE, the industry it functions in and the risk factors associated with that industry.

Inevitably, companies operating in industries that involve low-skilled workers, such as mining, will experience higher pay gaps than companies where the lowest-paid employee is a relatively skilled worker, such as banks. While excessive executive pay should not be permitted, the conundrum lies in offering competitive packages that attract competent executives while ensuring fairness in overall remuneration in the company. While there is no instant solution for this conundrum, boards should strive to offer a competitive package that attracts, motivates and rewards its executives in line with industry standards while adhering to the principles of King V™. Minimal pay for executives is not being encouraged, but fair employee remuneration in comparison to executive pay should be adhered to.

The notion of directors being paid exorbitant salaries is also unreasonable where the performance of the company is poor. Any hint of this practice may adversely impact the reputation of the entity.

This was the case with Eskom, where the substantial executives’ salaries were criticised as the public utility faced years of load shedding, financial loss and public scrutiny. The exorbitant remuneration of CEOs can also adversely affect the stock market as investors are less likely to invest in companies where the CEO pays themself far too much. Unfair or excessive remuneration can negatively affect shareholder confidence and the company’s sustainability. Shareholders often push back against excessive remuneration at AGMs.

Lastly, a case can be made that employee retention may decrease when remuneration practices are unfair, as employees negatively perceive the organisation and seek opportunities for more equitable remuneration.

As has been depicted in the above article, CEOs cannot justify multi-million-rand salaries while employees struggle in difficult economic times. Not only does this go against the principles of good corporate governance, but it has several negative effects on the entity.

Unfair remuneration practices can affect share price and shareholder confidence. Investors are less likely to invest in companies where remuneration practices are unfair or excessive.

Further, employees are less likely to work or continue working for companies where executive remuneration is unfair, unreasonable or irresponsible. Ultimately, the remuneration of executives is a governance issue that must be managed effectively by the organisation.

References:
Staff Writer (2026) ‘Salaries in South Africa in 2026 – what people earn,’ BusinessTech, 6 February. Available at: Salaries in South Africa in 2026 – what people earn – BusinessTech (Accessed: 18 August 2026).

Sheikh, F., (2026) ‘Average Salary in Soth Africa 2026: By Industry,’ PayTools, 10 August. Available at: Average Salary in South Africa 2026: By Industry (Stats SA) (Accessed: 18 August 2026).

Crotty, A. (2024) ‘Why the Woolies boss was paid 1,300 times as much as a shopfloor worker,’ GroundUp, 18 September. Available at:
https://groundup.org.za/article/why-the-woolies-boss-was-paid-1300-times-as-much-as-a-shopfloor-worker/ (Accessed: 19 August 2026).

Ibid.

Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all its rights are reserved.
Robinson, K. (2026) Applied Governance. 2nd edn. Johannesburg: The Chartered Governance Institute of Southern Africa.

Ibid.