The average CEO in the retail and wholesale sector earns 597 times more than the lowest-paid worker, according to a report by shareholder activism organisation Just Share.
The analysis, conducted across 10 JSE-listed companies, highlights the wage inequality between CEOs and the lowest-paid workers, as well as progress in board and management diversity.
The report looks at major players Shoprite, Pick n Pay, Pepkor, TFG, Woolworths, Mr Price, Dis-Chem, Clicks, Truworths and Spar. It says these companies collectively employ nearly 390,000 full-time employees and generate annual revenues of R833.7bn.
The average lowest paid worker in the wholesale and retail sector would need to work for 21 months to earn what an average CEO in this sector earns in one day, Just Share said.
According to the report, Woolworths’ CEO earns 1,308 times more than the company’s lowest-paid worker. The group’s internal minimum wage is R93,600 per annum, 57% higher than the industry standard, but this is offset by the CEO’s remuneration package of R122.5m.
Other companies are not far behind, with Shoprite having a CEO-to-lowest-worker ratio of 991:1 and Mr Price at 711:1.
The report shows that long-term incentives make up a big portion of CEO remuneration, contributing to these disparities. Long-term incentives account for 60% of Woolworths’ CEO’s pay and 49% of TFG’s CEO’s pay, Just Share said.
Kwanele Ngogela, senior inequality analyst at Just Share, said that while the sector played a crucial role in providing employment, it was important to acknowledge the contribution of vertical wage gaps to SA’s high inequality levels.
The report also delved into racial and gender diversity at the board and management levels, showing mixed results across companies.
Clicks Group stood out as a positive example, with 60% black board representation and 40% female representation.
However, the report found other companies, such as TFG and Truworths, lag behind, with black representation targets as low as 29% and 25%, respectively.
Pepkor and Pick n Pay failed to disclose diversity targets, while others reported low female representation at top management levels, suggesting a slow pace of transformation, the report said.
The Employment Equity Act requires companies to implement affirmative action measures, but Just Share criticised the sector for its “lacklustre commitment” to achieving meaningful change.
“Poor levels of representation of women and black people in top management roles, which are consistently lower than at the board level, suggests that equitable representation in the workplace may not be a primary focus in these companies. The Foschini Group is the exception when it comes to female representation,” Just Share said.
The newly signed Companies Amendment Act of 2024 is expected to enforce greater transparency in pay disparities. The act mandates public and state-owned companies to disclose the total remuneration of directors and officers, as well as the pay ratios between the highest and lowest earners.
Notably, it excludes requirements for gender pay gap disclosure — something Just Share believes should be prioritised in future legislation.
The organisation said that Woolworths, which has the highest vertical pay gap, faced tough questions from shareholders at its 2023 AGM regarding the fairness of its CEO’s remuneration.
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