Two ICT CEOs 'overpaid'

Altech CEO Craig Venter is among the top 10 overpaid CEOs of JSE-listed companies, according to a report.

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New research by Prophet Analytics finds two ICT companies' CEOs are overpaid when their salaries are weighed up against excess shareholder returns.

According to the Labour Market Navigator's CEO Remuneration Report for 2013, Altech CEO Craig Venter, with a total remuneration of R8 million, is among the top 10 overpaid CEOs at the helm of JSE-listed companies. Also listed in the top 10 is James Herbst, who earned R4.8 million at the helm of the Huge Group.

Venter is placed at number five in terms of being overpaid, while Herbst is the eighth most overpaid CEO, according to the research.

This year, the survey was extended somewhat to include 230 JSE-listed entities, instead of the 212 it used last year "as a result of improvements in company reporting on executive remuneration".

The report found South African firms are among the best-performing in the world, with the result that CEOs' performance bonuses have tended to be substantial. It also notes that the relationship between CEO remuneration and corporate profitability has improved since last year.

"More managers than ever are being explicitly rewarded for corporate profitability, both in cash and through the use of stock options. Unfortunately, many companies still have a long way to go before their CEO remuneration strategy provides the correct behavioural incentives," says the report.

The report uses a measure of corporate profitability of the excess return over the market return on shareholders' funds to develop an indicator and then weighs remuneration against that indicator to determine whether CEOs are over-, or underpaid.

Herbst says his salary is determined by a remuneration committee that comprises shareholders who own more than 50% of the stock. Herbst points out that his basic salary, according to the report, was R1.99 million last year, while he also received a bonus of R2.6 million.

In the first half of the current financial year, Huge made an operating profit of R4 million, an improvement on the R3 million operating loss at the end of the last financial year, but down year-on-year from the six months to August 2011, when it reported R8.6 million.

Altech made a R586 million loss in the six months to August, up from the loss at the end of the previous financial year and a reversal of its profitable position in the six months to August 2011. Altech was not able to comment on the report.

Venter and Herbst are included in a list that also counts Northam Platinum CEO Glyn Lewis, with a total package of R11.1 million as the most overpaid CEO, and Mike Upton, who received R8.84 million as CEO of Group Five.

Among the top 10 underpaid CEOs on the bourse is ISA Holdings CEO Clifford Katz, who earned R1.4 million in total, and Lindikhaya Sipoyo, head of Total Client Services, who earned R2.2 million in total.

ICT CEOs salaries in descending order of total remuneration based on the Prophet Analytics report: