On Friday, South African Public Enterprises Minister Lynne Brown, approved a below inflation increase of 4.6% in non-executive remunerations for the company, and has decided to defer the decision regarding remuneration increases for Eskom executives.
The minister made this decision in her capacity as shareholder representative in Eskom, the parastatal said in a company statement.
Eskom expected to meet continued expectations
According to the power company, the minister commended the Eskom Board and executive management team for stabilising the country’s power network.
She added that she expects the utility to continue to play its role in ensuring energy supply as a backbone to economic growth.
She noted that the power system has remained stable due to the rigorous maintenance programme that Eskom has put in place, resulting in no load shedding being implemented for over 10 months, the utility highlighted in a statement.
Grounds for remuneration
The utility explained that remuneration of non-executive directors at the company is benchmarked against companies of a similar size, and is in line with guidelines issued by the Department of Public Enterprises (DPE).
Remuneration proposals from the People and Governance Committee are submitted to the Board, which makes recommendations to the shareholder. Non-executive directors receive a fixed monthly fee and are reimbursed for out-of-pocket expenses incurred in fulfilling their duties, the utility explained.
Speaking at Eskom’s annual general meeting (AGM) on Friday, ahead of next Tuesday’s announcement of the company’s financial results for the year ended 31 March 2016, Board Chairperson Dr Baldwin Ngubane said the executive remuneration strategy is reviewed to align to the DPE Remuneration Guidelines and best practice; the balance between fixed and variable remuneration (short- and long-term incentives) is reviewed annually.
“Our approach to remuneration and benefits is designed to attract and retain skilled, high-performing executives and employees. We aim to remain competitive to attract and retain key skills, by providing market-related remuneration structures, benefits and conditions of service,” Ngubane said.
He added: “International and local benchmarks are considered in determining executive remuneration, to ensure that executive packages are aligned to those offered by companies of similar stature. Market factors are considered, to keep remuneration at levels that will assist us in retaining key leadership skills.
“We are mindful of the responsibilities and risks that directors and executives bear, given their broad accountability.”
Employees are remunerated in accordance with their job grade, and at least at the minimum of the applicable salary scale. We guarantee internal equity through defensible differentials in pay and benefits, and resolve unjustifiable race- and gender-based income differentials if they arise, the utility explained.