Boardroom Tails: How to solve the Whitey situation
Outgoing Shoprite CEO Whitey Basson encapsulates almost everything that’s wrong with executive remuneration. As Shoprite chairman Christo Wiese never tires of reminding us, Basson is a valuable asset. The problem is that every time this asset receives more millions in pay, it bumps up packages of the excruciatingly mediocre executives who populate our listed companies. This is achieved through the benchmarking exercises carried out by remuneration consultants. Companies compare their remuneration practices with others, which sounds straightforward until you introduce the assumption that all CEOs are pretty much the same and that, critically, they are in short supply. So by paying Basson R100m you lift the average used in the benchmarking exercise. This means other CEOs get paid a little bit more because Basson was outstanding. It’s a lot worse than that. The damage leaks into the public sector, where the generous remuneration is funded by taxpayers. The public sector uses similar ex...
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