Standard Bank CEOs bagged R89m in 2016

Standard Bank’s group chief executives, Ben Kruger and Sim Tshabalala, received total remuneration of nearly R45 million each in 2016, an increase of 3% on the year prior. Combined compensation jumped by 43% in 2015, with Kruger’s total increasing by 61% and Tshabalala’s by 28% to (near) parity. At that time, the bank said remuneration had been “normalised”.

The new chairman of the bank’s Remuneration Committee (Remco), Peter Sullivan, writes in the Integrated Report published on Friday that “the chief executives (CEs) met or exceeded most expectations in the areas where they have direct responsibility and accountability”. However, he points out that Liberty’s 61% drop in earnings had a “significant” impact on the group’s results. The Remco “debated the remuneration of the CEs at length,” it is noted, and it took the Liberty impact into account.

“Consequently, the committee agreed on a 4% increase in total short-term incentive, in line with the growth in headline earnings.” Actual cash earned in the year (including benefits and allowances) totaled just over R19 million each.

	Ben Kruger			Sim Tshabalala
	2015	2016	%	2015	2016	%
Cash package	R7.538m	R7.809m	3.6%	R7.583m	R7,850m	3.5%
Benefits, allowances	R1.247m	R1.296m	3.9%	R1.406m	R1.348m	-4.1%
Short-term incentive (cash)	R10.15m	R10.09m	-0.6%	R10.15m	R10.09m	-0.6%
Short-term incentive (deferred)	R11.85m	R12.79m	8%	R11.85m	R12.79m	8%
Performance Reward Plan (PRP) award	R12.5m	R12.5m	–	R12.5m	R12.5m	–
Total	R43.285m	R44.485m	2.8%	R43.489m	R44.578m	2.5%

It does add elsewhere in the remuneration report that “Ben and Sim became increasingly engaged with Liberty’s board and management to ensure a speedy return to improved financial performance and strategic positioning”.

It is clear that the group’s unique situation of having joint chief executives effectively doubles the remuneration of this role.

Source: Standard Bank Annual Report

David Munro, chief executive, Corporate and Investment Banking, earned more than Kruger and Tshabalala, thanks to what Sullivan describes as a “very strong set of results”. His total remuneration grew by 6.9%, with “a 9.6% increase in short-term incentive” payment.

Munro’s counterpart in Personal and Business Banking (PBB), Peter Schlebusch, saw his total remuneration increase by 6.1%. Alongside executive responsibility for PBB, Schlebusch is also the head of the bank’s digitisation effort and is measured on this basis as well.

The bank says the “Japan fraud incident”, which it describes as a “uniquely sophisticated fraud”, was “taken into account in Peter’s remuneration determination and the PBB incentive pool determination”, even though “revenues were generated to cover losses incurred”. The losses from this card fraud incident are quantified as R300 million.

Sullivan says the Remco judged Schlebusch’s performances on both PBB and digitisation to be “excellent”.

The Remco considered newly-appointed group financial director Arno Daehnke’s “achievements and the complexity of his role in comparison to the market in arriving at his total remuneration”.

In total, remuneration for executive directors and prescribed officers was R209.3 million in 2016, with R37.5 million of this being the fixed portion of that (i.e. cash package, retirement contributions paid, and other allowances). The cash portion of the annual (short-term) incentive award was R56.63 million. The remainder, some R115.17 million, comprises share awards as part of the short-term (annual) incentive as well as the long-term performance reward plan (PRP). The latter is measured at face value as at the date of award (with units allocated in 2017 using the group’s closing share price on March 1 (R146.38)).

The first awards under the PRP, made in March 2014, vested in March this year (described as a “focus area” in the group’s report. After subtracting employees’ tax, the following amounts of Standard Bank shares were ‘delivered’ to executives on March 31, 2017:

• Ben Kruger: 37 040 shares (share price: R153.70)
  Value of transaction: R5.693 million
• Sim Tshabalala: 37 040 shares (share price: R153.70)
  Value of transaction: R5.693 million
• Arno Daehnke: 17 787 shares (share price: R153.70)
  Value of transaction: R2.734 million
• Associate of Arno Daehnke (S Brugman): 17 787 shares (share price: R153.70)
  Value of transaction: R2.734 million

Hilton Tarrant works at immedia. He can still be contacted at hilton@moneyweb.co.za.

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