R100 million payday for the CEOs of Standard Bank and Absa... here’s why
Standard Bank and ABSA - two of the countries big four banks - have handsomely rewarded their chief executive officers with big pay days after strong performances as seen in their financial year end results.
Standard Bank CEO Sim Tshabalala and his ABSA counterpart, Arrie Rautenbach, were paid R123 million between them. Together, their pay for 2023 could fund the annual salaries of over 500 of their lowest paid workers.
Tshabalala’s total remuneration package increased from R55.7 million in 2022 to R83.3 million in 2023, while Rautenbach earned R40.03 million, a R4.75 million decline from his 2022 remuneration of R44.78 million.
Banks generally release their financial results at the end of March, with these often containing the substantial compensation packages they pay out to their chief executives.
How Standard Bank performed
In the twelve months to 31 December 2023 Standard Bank recorded headline earnings of R42.9 billion, up 27% relative to the twelve months to 31 December 2022 which was R34. 2 billion and delivered a return on equity of 18.8% (16.3% in 2022).
This strong performance was underpinned by a robust and growing franchise system.
The Africa Regions franchise contributed 42% to group headline earnings.
The top eight contributors to Africa Regions' headline earnings were Ghana, Kenya, Mauritius, Mozambique, Nigeria, Uganda, Zambia and Zimbabwe, Standard Bank said.
Why Tshabalala earned R83 million
Tshabalala was rewarded with a major bump in earnings for the strong performance, with a R27 million increase in earnings. Tshabalala total remuneration package increased from R55.7 million in 2022 to R83.3 million in 2023.
This translated to around R228,230 per day for Tshabalala. In comparison, Standard Bank told IOL it’s lowest paid employee was paid a minimum banking guaranteed package of R244,900 per year, with effect from March 2024. The bank said the package excludes annual discretionary bonuses which are determined on an individual basis.
This means that Tshabalala’s 2023 earnings of R83.3 million could fund the salaries of 340 of the banks lowest paid employees.
Tshabalala’s increases were directly linked to the vesting of the long-term performance reward plan (PRP) created by Standard Bank.
The PRP award to be made to the CEO in March 2024 and will increase by 8% from the prior year.
Tshabalala saw his PRP award increase from R25.8 million in 2022 to R47.6 million in 2023.
The bank said in its report that Tshabalala’s fixed remuneration will increase in line with South Africa’s inflation.
How Absa performed
Absa also released their annual remuneration report for 2023, which showed that the bank recorded a total income revenues of R104.6 billion for the year ending December 2023.
The company said within this context, normalised headline earnings increased 1% as pre-provision growth of 6% reflected momentum in the business, offset by higher credit impairments, particularly in South Africa.
“Strong revenue growth of 8% meant that the Group crossed the R100 billion revenue threshold for the first time, with stronger growth being generated within Africa Regions,” Absa said.
Rautenbach’s earnings explained
CEO Rautenbach’s remuneration amounted to R40.03 million in 2023. This is a 10.6% cut from his 2022 earnings where he earned R44.78 million.
Rautenbach’s cost to company for 2023 can be broken down in the following sections:
– A fixed salary of R9.79 million
– A cash incentive of R6.8 million
– A deferred award of R5.8 million
– A performance award vested of R17 million
The Absa CEO’s total earnings of around R40 million, therefore means he earned around R109,685 a day in 2023.
In terms the lowest salary package at Absa, according to their latest remuneration report Absa lowest package is R230,000, with effect from April 2024.
This means Rautenbach’s R40 million earnings could fund the salaries of 174 of the Absa bank’s lowest paid employees.
IOL Business