Bill for transparency on wage gap

The government’s push to compel companies to disclose the wage differentials between executives and workers is a step closer to becoming law after the cabinet approved the publication of the Companies Amendment Bill for public comment.

The government’s push to compel companies to disclose the wage differentials between executives and workers is a step closer to becoming law after the cabinet approved the publication of the Companies Amendment Bill for public comment.

In a statement on Monday after a meeting, the cabinet said the proposed legislation seeks to amend the Companies Act to reduce regulatory regime on businesses; tighten anti-money laundering gaps; strengthen the disclosure requirements and enhance the shareholder powers in a company.

The department of trade, industry & competition said the bill containing all the proposed amendments would be published in the government gazette in the coming days.

‘GROSS INJUSTICE’

In his budget vote speech in May, trade, industry & competition minister Ebrahim Patel said the proposed amendments aim “to tackle the gross injustice of excessive pay”.

The legislation will require disclosure of what top executives earn, including CEOs and CFOs. This is in line with international trends.

The Companies Act focuses on the disclosure of the remuneration and benefits of directors. A recent PwC report showed that CEOs from the 10 biggest companies listed on the JSE earned about R24m a year on average, more or less equal to their peers at London-listed companies and about six times

more than what President Cyril Ramaphosa earns.

SA’s minimum wage is just more than R20 an hour.

SA is widely seen as one of the most unequal societies in the world, but moves to enforce the disclosure of executive pay is likely to be frowned upon by business which often opposes state interference.

The amendments will also deal with stronger governance of excessive director pay, and enhanced transparency of ownership and financial records.

“For a number of years now, shareholders and policymakers globally have put the spotlight on executive pay,” Patel said in May.

“These concerns relate to the connection between pay and long-run performance and the pay gap in a firm.

“A good example was the executive bonuses and severance packages at firms that are not doing well.

“We are looking carefully at global trends on pay disclosure and reviewing legislation on this matter,” he said.