The hefty increase in the salary of Sasol’s chief executive David Constable has elicited considerable comment. Including an outspoken piece by Johann Redelinghuys, doyen of SA’s Executive Search profession. We interviewed Redelinghuys on CNBC Africa’s Power Lunch today – click here to read the transcript of our discussion, and the article which has stirred the hornet’s nest. We asked Sasol for a member of its Remuneration Committee to participate in the discussion. The company declined, but media relations executive Alex Anderson sent a comprehensive statement which is published below. – AH
From Alex Anderson of Sasol:
We recognise that executive remuneration is going to spark discussion, particularly in the South African context.
There will be those who agree and those who do not, and there a many factors that come into play in ensuring that we are able to attract the right talent.
We would like to be clear though, that the 68% “salary increase” that has been quoted in numerous reports is not a fair reflection of the actual facts around David Constable’s remuneration.
Here is a breakdown of the cost of his package, as disclosed in the remuneration report:
a) Sign on payment: The last part of the sign on payment which was negotiated with David in March 2011, and which was partial compensation for the shares that he forfeited upon his resignation from his previous employer. This was a one off amount paid to him in July 2012 and will not be repeated. It should therefore not be included in the calculation of increase in year-on-year remuneration costs.
b) Base salary: David is remunerated in accordance with the company’s expatriate policy. He received an increase of 4,5% in October 2013 on his US dollar-based salary. Upon translating this amount to rands for disclosure purposes, it significantly increases due to the depreciating rand and is indicated as an increase of 30,7%, which he did not have the benefit of as he is paid in the United States. The 4,5% salary is the only part of the package which is guaranteed going forward.
c) Benefits: Benefits are driven by a standard expatriate policy and includes accommodation, transport, schooling and home leave allowance. Year-on-year cost of benefits reduced by 31% if the sign on payment is excluded.
d) Short term incentive: This is calculated and paid in net US dollars. There was a year-on-year increase in net US dollars of 57%. Upon translation to rands for disclosure purposes, this indicates an increase of 97%. The short term incentive was granted on the basis of excellent group and individual performance, which also drove excellent shareholder returns.
e) Long term incentives: On the basis of performance, he was given an annual grant of long term incentives. In FY13, David received a significantly lower grant than any of the executive directors, as this was part of the negotiations at his appointment.
Hopefully this provides more clarity on the matter and that there has been a misinterpretation of the 68% figure.
