Executive pay is a trigger for many media commentators and shareholder activists, but the truth is that remuneration committees (remcos) have developed several methodologies for tackling what is a very challenging issue. Three main methodologies are used in SA where, in general, remuneration governance is on a par with global standards thanks to widespread adoption of the King Codes of Corporate Governance issued by the Institute of Directors in Southern Africa. Each method has its own strengths and weaknesses, and reward professionals need to understand them thoroughly in order to make the right choices — particularly as the practice of naming the consultant used by the remco is gaining traction. It is also worth emphasising that these methodologies are not watertight categories, and reward professionals will typically use elements of more than one methodology to arrive at a recommendation. Market benchmarking This is by far the most commonly used methodology in SA, and has the ben...
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