The courtesy vote is over: Part 1

For years the South African AGM treated the remuneration vote as polite theatre. Shareholders could frown, proxy advisors could write a sharp paragraph, and the board could promise a cup of tea and a letter.

That era ended on 22 May 2026. Sections 30A and 30B of the Companies Act 71 of 2008 are now in force. The policy vote is statutory. The annual report vote is statutory.

A failed implementation report is no longer a reputational bruise; it is a governance event with names attached to it (Republic of South Africa, 2008; Republic of South Africa, 2024; Republic of South Africa, 2026).

This is the first of two practical pieces for the executive remuneration team. Part 1 sets out what the statute actually requires, the consequences of a failed vote, the practical wrinkles already appearing, and the international weather system that South African shareholders are reading.

Part 2 covers the five tests the floor will run and a six-month operating plan for the rem team. Each piece stands alone.

Read: Navigating the RemCo annual cycle: Core steps for effective remuneration governance

What section 30A actually requires

Section 30A requires every public company and every state-owned company to table a forward-looking remuneration policy for ordinary-resolution approval. Once passed, it holds for three years.

Material amendments cannot be implemented until shareholders have voted them through.

A failed policy vote does not tear up existing contracts; the prescribed consequence is re-presentation at the next AGM or at a meeting called for that purpose.

The last approved policy continues until a new one is passed.

That is not a licence for complacency. It leaves the company running on yesterday’s rules while the market has already moved on. A rejected policy is a signal that the three-year contract with shareholders is out of date.

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The rem team’s job is to make sure the next version is ready before the current one is rejected, not after (Webber Wentzel, 2026; DLA Piper, 2026).

Section 30B: The sharper instrument

Each year the company must table a remuneration report covering the previous financial year. The report has three parts: a background statement, a copy of the policy, and an implementation report.

The implementation report must disclose, at a minimum, the total remuneration of each named director and prescribed officer; the highest-paid and lowest-paid employee; average and median employee pay; and the ratio between the top 5% and the bottom 5% of earners.

“Total remuneration” is defined widely: salary, benefits, employer contributions, and all short- and long-term incentives, including options and awards (Republic of South Africa, 2008, s. 30B).

Fail the report vote once and two things follow. The committee must explain at the next AGM how shareholder concerns were taken into account. Non-executive directors who have served on the committee for 12 months or more must stand for re-election as committee members.

Fail it twice and those directors must stand down from the committee for two years, even if they remain on the board after a successful board re-election (Webber Wentzel, 2026; Cliffe Dekker Hofmeyr, 2026).

Read: Executive pay under scrutiny: Legislative changes explained

South Africa has imported the logic of Australia’s two-strikes rule and bolted it onto an ordinary resolution. The old King IV 75% advisory threshold still shapes listed-company engagement culture and JSE practice, but the legal tripwire is now 50% plus one.

Old Mutual’s 2026 AGM illustrated the split personality of the transition year. Both the policy and the implementation report cleared the statutory majority while missing the historic 75% advisory bar.

The company was therefore required to engage under the old framework even as the new Act was already in force (Old Mutual, 2026). Teams that treat 50% as the only number that matters will be surprised when sophisticated holders still expect the higher bar.

Two practical wrinkles already visible

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There was no transitional grace. CIPC has confirmed that an AGM convened by a valid notice issued before 22 May 2026 is not captured by the new sections; every other AGM after that date is (CIPC, 2026).

Companies that posted notices early escaped for one cycle. Everyone else has had to absorb the requirements in real time.

Holding companies with almost no employees of their own face an awkward statutory ask. The Act speaks of “the company”, not the consolidated group.

Teams that simply paste group headcount into a holding-company report are inventing a number the statute does not require. Teams that disclose a near-empty payroll will be asked why the ratio is meaningless.

Read: Are shareholders finally becoming more picky about pay?

Either choice needs a plain-English method note in the background statement. Shareholders will decide whether the explanation is adequate; the vote is the mechanism (Cliffe Dekker Hofmeyr, 2026; South African Reward Association, 2026).

The international weather system

South African shareholders do not live in a closed system. The same institutions vote London, New York, Sydney and Johannesburg. Headline dissent eased in 2026. Georgeson recorded European opposition to remuneration reports and policies falling from 34.5% in 2025 to 30.9%, still the most contested resolution class.

United States say-on-pay support in the S&P 500 climbed above 90%, with failures rare and concentrated on outliers. Australia’s S&P/ASX 300 strike count eased from the 2023-24 peaks to 33, yet the strikes that landed were angrier, with more of them attracting opposition above 65% (Georgeson, 2026; Conference Board, FW Cook and ESGAUGE, 2026; Glass Lewis, 2026; Reuters, 2026).

Three currents sit underneath those averages. First, the debate has shifted from architecture to quantum.

Most new FTSE 100 policies raised long-term incentive headroom rather than redesigning the plan; median total variable opportunity is now around 600% of salary, with a handful above 1 000%.

Investors will live with a larger envelope if the performance contract is honest. They will not live with a larger envelope and a softer hurdle on the same page (Clifford Chance, 2026; WTW, 2026).

Second, one-off awards and mid-year target resets remain the fastest way to lose a room. United States data show a rebound in special equity grants. Proxy advisors have lengthened their pay-for-performance look-back to five years and now score realised pay, short-term payouts versus returns, and qualitative red flags such as upward discretion (Pay Governance, 2026; Institutional Shareholder Services, 2025; Glass Lewis, 2025).

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Read: Incentive payouts soar for top South African bosses

A South African team that treats a buy-out, a retention grant or an in-flight adjustment as a footnote is writing the first paragraph of next year’s against recommendation.

Third, analysis has industrialised. Artificial intelligence now lets asset managers and proxy houses test disclosure gaps at scale. Inconsistent peer groups, unexplained discretion, STI measures that look like the day job, and LTI hurdles that never move will be found whether or not a human analyst has time to read page 87.

The defence is not more adjectives. It is a single, reconcilable data room behind the printed report.

What this means for the rem team now

The statutory floor is clear. The policy must be ready for a binding ordinary resolution every three years or on material change. The annual report must contain the prescribed disclosures and survive an ordinary resolution.

A first failure triggers an explanation and committee re-elections. A second failure removes the committee members from that role for two years.

The international pattern is that overall dissent has moderated, but the remaining opposition is more surgical and better armed with data.

The questions that travel well across markets are not a secret. They cluster around alignment between pay and shareholder experience, variable pay that still varies, discretion that can be replayed, the treatment of new leaders and special awards, and the workforce numbers the Act now forces into the open.

Part 2 of this series sets out how to prepare for those tests and the six-month operating rhythm that makes the preparation reliable. The test for this piece is simpler: if the rem team cannot explain, in two sentences, what happens if the report fails twice, the statutory work is not finished.

Dr Chris Blair is group director of 21st Century.

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