Well, Investec certainly has thrown the fat cat among the activist pigeons. Its plan to toss in up to R2.2m more to the already excessively generous remuneration packages of its executive directors raises all sorts of uncomfortable questions.
The most important one is: what is the source of the statistics on which the decision to pay the remarkably hefty security costs directly to the individual executive is based?
No doubt crime in SA is an enormous problem, but there’s little evidence that the hugely well-paid executives of listed companies are any more likely to be victims of violent crime than your average reasonably well-paid Investec employee. And certainly not as likely as your average underpaid township resident.
Yes, it seems kidnapping is on the increase, but so far kidnapping in SA has rarely been connected with ransoms, and the recent recorded increase is probably linked to the increase in aggravated robberies and assault.
In a report released earlier this year, the Institute for Security Studies said three-quarters of kidnappings in SA were committed during other crimes, such as armed robberies and sexual assaults.
Of course, it may be that the kidnapping of corporate executives has reached pandemic-like levels and we know little about it because the police have not been informed and ransoms have been paid off privately. We’ve all seen the movie.
Surely the better solution would be to not overpay them in the first place and thereby avoid making the poor things targets?
But the SA corporate community is relatively small. It’s also quite leaky, so we’d probably have heard something.
A second question is: how far down does this generous R2.2m kicker go? For the purposes of the remuneration policy, the company only had to get approval for the executive directors, but is it also topping up the salaries of middle management and perhaps even bank tellers to ensure they’re safe? “Investec takes the safety and security of all our people seriously,” the bank says. But perhaps only really seriously when it comes to the very top guys. Because, says the bank, they have high public profiles.
This is reminiscent of the executive class’s self-serving whingeing back in 2000 when they hoped to block legislation requiring the disclosure of their remuneration. Their argument (with zero evidence) was that disclosure of the megabucks they were receiving every year would inevitably prompt the creation of a new category of criminal activity, kidnap and ransom of corporate executives. As if even the most dull-witted of our criminals couldn’t easily track down these big earners from their ostentatious lifestyles.
A third question is: will receipts be necessary and what sort of receipts will be accepted for payment on the R2.2m commitment? If receipts are not required, will some executive be tempted to pocket the money and take a risk just as 60-million other thrill-seeking South Africans are forced to do daily?
Related to that is whether, by paying the executives directly to secure their own security, the company has offloaded any obligation to pay whatever ransom might be demanded in future? And precisely what obligation was that? And how far down the management hierarchy did it go?
Essentially, we seem to have the bizarre situation in which hugely well-paid executives have to be paid even more to shelter them from the impact of being hugely well paid
Essentially, we seem to have the bizarre situation in which hugely well-paid executives have to be paid even more to shelter them from the impact of being hugely well paid. Surely the better solution would be to not overpay them in the first place and thereby avoid making the poor things targets?
Meanwhile, in the monkey-see, monkey-do world of executive remuneration — consultants call it benchmarking — can we expect to see the remuneration committee of every other listed company tack an additional R2.2m on to the guaranteed pay of its executives? Even those companies currently treating executive security as an operational expense might be persuaded, by their executives, to include it in remuneration instead.
The biggest worry, of course, given all the “benchmarking”, is that Investec has set a precedent not only for other executives but for our politicians. We all know how well protected our senior politicians are, what with their VIP security personnel ensuring they are kept well clear of voters, but what if the ordinary old MP decided they also have a relatively high public profile and should be given a few bob, or even R2.2m, to guarantee their security? And then there are the councillors who appear to have very large targets on their backs given the horrific rate at which they are assassinated.
Are we surprised that the shareholders consulted by Investec provided “near unanimous” support of this new payment? Hardly. These were probably institutional shareholders who generally believe there should be no limits to the largesse heaped upon their mates in the executive class.
No doubt next year’s Investec annual report will answer some of these questions.
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