Investec’s danger pay

• Group budgets up to R2m for each executive’s safety

Investec will pay up to £100,000 (R2.02m) to cover the personal security costs of each of its executive directors in SA due to concerns about the country’s rising crime levels.

During the bank’s annual general meeting (AGM) on Thursday, questions were raised by shareholder activist group Just Share on a resolution that sought shareholder approval to amend directors’ remuneration policy so that the cost of personal security for executive directors in SA would no longer be deducted from their fixed pay. The resolution, which was approved by 99.79% of shareholders during the AGM vote, means the security costs of the bank’s SA-based executive directors will now be borne by Investec.

Tracey Davies, executive director of Just Share, questioned Investec about the policy, asking whether it was reasonable to augment the remuneration of executive directors by covering their security costs when they are living in a country characterised by extreme income inequality and poverty. Davies asked Investec chair Philip Hourquebie whether this would create a poor impression, but he referred the question to Henrietta Baldock, chair of the bank’s remuneration committee.

“We don’t actually see that as an increase to executive directors’ fixed pay per se,” said Baldock.

“Unfortunately, the personal security arrangements are something which we feel we need to put in place for the executives based in SA given their high profile and given the number of other examples of high-profile business people and

other people in SA being targeted.”

While the AGM did not specify exactly how much would be spent on security for Investec’s SA-based executive directors, the group later told Business Day it was budgeting up to £100,000 per executive director, without giving a time frame over which the money would be spent.

However, the bank declined to give details on what the £100,000 benefit would be spent on given the “sensitive nature of personal security.

“Investec takes the safety and security of all our people seriously,” the bank said. “Our executives, in particular, have relatively high public profiles. As an unintended consequence this potentially makes them more vulnerable and increases their personal risk. The remuneration committee consulted extensively with shareholders on this resolution and received near unanimous support from them.”

GRIM PICTURE

SA’s most recent official crime statistics for the three months to end-March 2022 painted a grim picture of safety and security in the country. Murder jumped 22%, while sexual offences and assault also recorded doubledigit increases.

Kidnapping has increased at an alarming rate in SA, with crime statistics showing 3,306 cases were opened with the police in the first three months of 2022, a 109% increase from the 1,580 cases reported in the same period the previous year.

Every province in SA has seen an increase in kidnappings, with Gauteng showing the biggest rise after 1,563 cases were reported in the first three months of 2022 198% more than those reported in the corresponding period a year earlier.

Yet, while an argument could be made that high-profile executives in SA are more at risk of violent crime than their international counterparts, the same could also be said of their subordinates. Then there is the issue of SA’s glaring income inequality, reflected in a World Bank report earlier this year ranking the country as the most unequal society among 164 nations it analysed.

Baldock said during the AGM that the bank is aware of income inequality in SA and that shareholders could rest assured it is high up on the agenda of the remuneration committee. Even so, she dismissed Davies’s suggestion that footing the bill for executive directors’ private security could be seen as an additional salary enhancement in a country where the gap between rich and poor is considered extreme.

“That is something we have looked at this year and which we’ve realised we have to exclude from fixed pay in terms of remuneration policy,” Baldock said, referring to the private security arrangements of Investec’s executive directors.

“So, from that perspective, I wouldn’t really accept that it’s exacerbating the issue of wage inequality in SA. It’s really very specific to the arrangements we need to make for the executive directors.”

Investec’s 2022 remuneration report showed that CEO Fani Titi earned £4.33m (R87.86m) in the last financial year, including fixed pay as well as short- and long-term incentives. That was a 130% increase from the £1.88m he took home the previous fiscal year.

The bank’s AGM also saw shareholders approve a plan to buy back ordinary, redeemable and perpetual preference shares. Titi told Business Day on May 19 that the bank had excess capital in SA and was looking at ways to return capital to shareholders.