THE Department of Public Enterprises was in the final stages of developing new remuneration standards for executive and nonexecutive directors of state-owned companies, Public Enterprises Minister Malusi Gigaba said on Tuesday.
He said his department planned to finalise the framework by October and begin implementing it in the current financial year, though he stressed that changes to existing pay policies would have to be phased out to take into account existing employment contracts.
A moratorium has been placed on increases on executive pay at state-owned enterprises until the new framework has been finalised.
The minister said the standards would be informed by a set of guiding principles that would be "rational, transparent and require consistent application" by state-owned companies.
Replying in writing to a question in Parliament by Democratic Alliance MP Ken Sinclair, Mr Gigaba said that in terms of the new model, remuneration would be based on various multipliers such as economic impact, the company’s funding model as well as the complex environment within which the state-owned companies operate. Performance would have to be measured and aligned to the company’s shareholder’s compact with the government.
"The new remuneration standards will be enforced with no deviation," Mr Gigaba said.
He noted remuneration was a complex issue that required a fine balance between the state’s national objectives and the company’s commercial imperatives.
During the process of formulating the new model, consideration had been given to the idea of capping the remuneration of executives for a "reasonable period" until the gap between executives and ordinary workers had narrowed.