The disparity between the lowest and highest paid employees in the construction industry is still stark, despite the attention that executive pay received in the aftermath of the global financial crisis. A study of the annual reports of three large construction firms shows executive pay that is consistent with other listed firms.
However, a comparison of executive salaries with the minimum wages earned by workers at large construction firms such as Aveng, Murray & Roberts (M&R) and Group Five paints a different picture.
The lowest-paid worker in the civil engineering sector earns just R3000/month or R36000/ year. Moreover, the minimum wage is set at an hourly rate ( R18,97), making it easy for companies to employ contract workers.
According to M&R’s annual report, former M&R boss Brian Bruce’s salary more than doubled, even though the company posted a year-to-June loss.
He earned R10,2m, which includes a basic salary of R4,85m and a R4,85m “contract payment”. Bruce was paid R4,9m in the previous financial year.
Aveng’s annual report states Roger Jardine pockets a basic salary of R3,8m, which excludes other benefits, a bonus, a medium-term incentive and share options. No executive share options were exercised in the current financial year.
Group Five’s Mike Upton took R3,1m home, according to its annual report. He also received performance and equity incentives worth R7,3m, taking his wage for the year to R10,4m.
M&R says its remuneration policy takes short- and long-term incentives into account. In addition to an annual salary — which is benchmarked against appropriate companies — it rewards executives with an annual bonus. This is calculated by assessing company profitability, cash flow, returns and the individual’s performance indicators. Its long-term incentive, it says, is aimed at retaining executive talent.
But M&R sank into a R1,74bn loss for the year to June. It posted a diluted headline loss of 503c/share from earnings of 340c a year ago.
Aveng, which reported a headline earnings drop of 37% to R1,2bn, conducts a post annual salary review. This includes an assessment of whether there is a “sufficient link to performance in the manner in which increases were implemented”. An executive’s performance rating at Aveng will determine their salary increases as well as incentive awards. It also has short, medium and long- term incentives in place.
Group Five has a similar remuneration approach. Like other firms, its long-term incentives take the form of share options.
Publisher: I-Net Bridge
Source: I-Net Bridge