<\/p>\n
Sections 30A and 30B of the Companies Act 71 of 2008 are now in force. Public and state-owned companies must table a remuneration policy for ordinary-resolution approval (every three years or on material change) and an annual remuneration report for ordinary-resolution approval.<\/p>\n
A first failure of the report triggers an explanation and the re-election of long-serving non-executive members of the remuneration committee.<\/p>\n
A second failure removes those directors from the committee for two years (Republic of South Africa, 2008; Webber Wentzel, 2026). This is the second of two practical pieces.<\/p>\n
Part 1 set out the statute and the international context. This piece stands alone: it covers the five tests the floor will run and the operating rhythm the rem team needs if the chair is to answer without looking down.<\/p>\n
Read: The courtesy vote is over: Part 1<\/p>\n
What the floor will actually test<\/p>\n
The questions that travel well across markets are not a secret. They cluster around five tests. Each test needs an owner, a fact pack and a form of words the chair can use without looking down.<\/p>\n
Alignment, not apology<\/p>\n
If fixed pay rose while earnings, dividends or returns did not, say so in the first two pages and then explain the decision in commercial language.<\/p>\n
\u201cMarket positioning\u201d is not an explanation. Neither is \u201cretention risk\u201d unless the team can show who was being retained, against which alternative, and what would have been lost.<\/p>\n
Internal relativity belongs next to the external benchmark. A chief executive paid in a different galaxy from the rest of the organisation will be asked about the gap whether or not section 30B had forced the ratio into print.<\/p>\n
ADVERTISEMENT<\/p>\n
CONTINUE READING BELOW<\/p>\n
Read: Executive pay under scrutiny: Legislative changes explained<\/p>\n
Variable pay that still varies<\/p>\n
Shareholders have grown weary of short-term incentives that pay within a few points of target every year. If the curve is a gentle slope around budget, defend why budget is stretch rather than the plan already baked into guidance.<\/p>\n
If non-financial measures paid while financial measures missed, the minutes must show the trade-off was conscious.<\/p>\n
Safety going backwards while the bonus goes forwards is a risk-governance question, not a \u201cbalanced scorecard\u201d talking point.<\/p>\n
On the long-term side the fights are familiar: adjusted earnings that strip out costs management chose to incur; capital-efficiency hurdles that stand still; dividends credited onto awards that already vest in shares; restricted stock introduced without a bargain on reduced quantum.<\/p>\n
King V still expects malus and clawback to be live instruments, not shelf-ware (Institute of Directors in South Africa, 2025). \u201cThe rules did not allow an adjustment\u201d is an answer only if the team can show the committee considered changing the rules.<\/p>\n
Read: Incentive payouts soar for top South African bosses<\/p>\n
Discretion that can be replayed<\/p>\n
Boards that use discretion well write the principle before the event (ex ante). Boards that use it badly write the justification after the number is known (ex post).<\/p>\n
Keep a one-page discretion log: what was adjusted, why, the alternative formulaic outcome, the shareholder experience over the same period, and whether the same principle would be applied if the sign were reversed.<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
Investors accept downward discretion more readily than upward discretion. They notice when the committee discovers its spine only in good years.<\/p>\n
Read: Navigating the RemCo annual cycle: Core steps for effective remuneration governance<\/p>\n
New leaders and special awards<\/p>\n
Buy-outs should replace, not refresh. Lost awards can be mirrored on a like-for-like basis, with time and performance conditions preserved where they still have meaning.<\/p>\n
A joining grant that is simply more of the annual plan, on easier terms, will be treated as extra pay. If the incoming chief executive is paid more than the predecessor, separate the role, the market and the individual.<\/p>\n
Lumping those three into one sentence is how a clean appointment becomes a messy vote.<\/p>\n
One-off awards and mid-year target resets remain among the fastest ways to lose a room in every major market (Pay Governance, 2026; Institutional Shareholder Services, 2025).<\/p>\n
The workforce numbers the Act now forces into the open<\/p>\n
Section 30B\u2019s pay-gap ratio will be read as a political document even if the team treats it as a statistical one. Lock the method before year-end close: who counts as an employee, how part-time and variable pay are annualised, whether expatriates sit in the same pool, and how share awards are valued.<\/p>\n
The South African Reward Association\u2019s (SARA) guidance notes are the closest thing the market has to a working manual while regulations remain thin (South African Reward Association, 2026). Publish the method next to the ratio. A ratio without a method is an invitation to invent a scandal.<\/p>\n
Read: What shareholders want to see in C-suite remuneration<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
A working plan for the remuneration team<\/p>\n
Preparation is not a week of drafting in April. It is a six-month operating rhythm. The sequence below has proved the least fragile in markets that already live with binding or near-binding votes.<\/p>\n
Build one source of truth. A single workbook should reconcile the single-figure tables, the section 30(4) annual-financial-statement disclosures, the section 30B numbers, the incentive trackers and the pay-gap file. If those sources disagree, the report is already wrong.
\nKeep the policy paper and the implementation paper apart. The policy is the three-year contract. The implementation report is the year just lived. Mixing them produces a document that is neither approvable nor defensible.
\nStress-test the peer group before the consultant\u2019s pack is final. If the set includes larger, richer or overseas businesses, put the reason in the background statement, not in a footnote an algorithm will miss.
\nWrite the uncomfortable paragraph first. Weak returns, a fat short-term incentive, a one-off grant, a missed safety target, a prior protest vote: page one of the chair\u2019s letter. Page nineteen is a tell.
\nPrepare two AGM packs. Pack A assumes the resolutions pass. Pack B assumes they do not: the explanation required next year, committee re-election mechanics, the engagement diary, and the design changes the committee is actually willing to make (Cliffe Dekker Hofmeyr, 2026).
\nEngage early and specifically. Take the three issues most likely to cost votes to the ten holders most likely to move the result. Record what was said. If the committee then ignores that feedback, the next letter must say so.
\nRehearse the chair and the committee chair together, using this year\u2019s numbers. Inconsistent answers between the two of them are worse than one awkward silence.
\nTreat King V and the JSE requirements as the quality floor, not the legal ceiling. The Act tells you what must be tabled. King V tells you what will be believed (Institute of Directors in South Africa, 2025).<\/p>\n
What \u2018enough\u2019 looks like on the day<\/p>\n
A ready team can hand the chair a two-page brief covering outcome versus shareholder experience, the three largest judgement calls of the year, the pay-gap ratio and its method, the policy cycle, and the engagement record.<\/p>\n
Behind that brief sits a data room an analyst can audit. In front of it sits a chair who can say, without theatre, that the committee would have made the same call if the share price had moved the other way.<\/p>\n
Read: SA\u2019s wage gap is huge \u2026<\/p>\n
That last sentence is the whole game. Markets will tolerate high pay when the contract is hard and the story is true. They will not tolerate a soft contract wrapped in governance prose.<\/p>\n
Sections 30A and 30B have removed the option of treating the protest vote as a weather report. The weather now has consequences. Treat the AGM as the examination it has become, or sit the paper twice.<\/p>\n
Dr Chris Blair is group director of 21st Century.<\/p>\n
#Prepare #sit #paper #Part<\/p>\n","protected":false},"excerpt":{"rendered":"
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