South Africa: Executive Incentive Payouts Surge, PwC Reports

• Executive compensation for CEOs and CFOs in South Africa increased significantly, primarily driven by substantial rises in short-term and long-term incentive payouts.
• The South Africa Companies Act, effective May 2026, mandates new remuneration ratio disclosures and introduces a binding shareholder vote on executive pay.
• Non-executive directors on remuneration committees face potential disqualification for two years if shareholders vote against the remuneration implementation report at two consecutive AGMs.
• Shareholder support for executive pay implementation reports generally improved, though scrutiny persists regarding poorly justified incentive awards.
• Non-executive director fees also increased, receiving high shareholder approval, while JSE Top 200 boards exhibit specific structural and demographic characteristics.

The introduction of a binding remuneration vote further intensifies shareholder oversight, with specific penalties for remuneration committee non-executive directors if implementation reports repeatedly fail to gain sufficient support.

Executive compensation for top leadership in South Africa saw notable increases in the period spanning March 2025 to February 2026, according to the 19th Directors Remuneration and Trends Report by PwC. Chief Executive Officers experienced a 9% rise in their total remuneration, reaching R23.1 million, while Chief Financial Officers' median pay grew by 7% to R13.5 million. This upward trend was predominantly fueled by substantial increases in incentive-based pay rather than fixed salaries.

Short-term bonuses for CEOs surged by 42%, and their long-term incentives, which reflect earnings over multiple years, climbed by an even more significant 67%. CFOs also saw considerable gains, with short-term incentives increasing by 39% and long-term incentives by 54%. The report, which analyzed remuneration across JSE Top 200 companies, highlighted a substantial disparity in long-term incentive payouts; CEOs in the upper quartile received R23.4 million, contrasting sharply with the R4 million earned by those in the lowest quartile. Similarly, upper quartile CEOs earned R16.4 million in short-term bonuses, compared to a median of R9.2 million across the group. This data underscores a clear shift in focus towards performance-linked compensation, emphasizing that the growth in South Africa executive incentive payouts is primarily driven by incentive structures.

The landscape of executive remuneration in South Africa has been significantly reshaped by amendments to the Companies Act, effective from May 2026. These legislative changes introduce critical new requirements for listed firms and state-owned enterprises, including the mandatory disclosure of the ratio between the lowest 5% and the highest 5% of earners. This provision aims to shed light on the considerable wage gap often observed between executive management and unskilled workers, fostering greater transparency, a key aspect of South Africa Companies Act remuneration reporting.

Furthermore, the Companies Act now mandates a binding remuneration vote, empowering shareholders to directly influence executive pay decisions at Annual General Meetings (AGMs). A key consequence of this new regulatory framework is the potential disqualification of non-executive directors serving on the remuneration committee. Should shareholders vote against the remuneration implementation report at two consecutive AGMs, with support falling below 50%, these specific non-executive directors are prohibited from serving on the committee for a two-year period, although they may retain their positions on the main board. Despite these enhanced scrutiny measures, shareholder support for remuneration implementation reports generally increased, moving from 83.8% in 2025 to 89.6% in 2026. However, the PwC Directors Remuneration and Trends Report indicates that shareholders continue to scrutinize certain practices, such as substantial sign-on awards lacking performance conditions and large long-term incentive grants without adequate justification.

Beyond executive compensation, Non-executive director fees South Africa also experienced an upward trajectory during the reporting period. Median fees for general board members increased by 7.7%, while chairpersons saw their fees rise by 6.5%. Proposed median fees were R1.7 million for chairpersons, R1.5 million for deputy chairpersons, R1.2 million for lead independent directors, and R518,000 for other board members. Shareholder approval for these proposed fees remained exceptionally high, climbing from 98.1% in the previous period to 99.4%.

The PwC report also offers a comprehensive overview of the typical JSE Top 200 board composition, providing insights into JSE Top 200 executive pay trends. On average, these boards consist of eight non-executive directors, with an average tenure of 5.5 years. A significant majority, 79%, are independent, and 82% are South African nationals. In terms of diversity, 64% of board members are male, and 55% identify as African, Coloured, or Indian/Asian. These insights provide a broader context to the governance structures and remuneration practices within leading South African companies.

Lawyers and compliance officers must advise JSE-listed companies on the enhanced disclosure requirements under the Companies Act regarding executive remuneration ratios and the implications of binding shareholder votes, particularly concerning the potential disqualification of remuneration committee non-executive directors if votes fail repeatedly. Boards need to ensure incentive structures are clearly linked to performance and adequately justified to mitigate shareholder scrutiny.

Source: Reporting based on recent South African executive compensation data.