The 10 non-executive directors of Land Bank face “significant” pay cuts. According to media reports, Dr Ben Ngubane, chairperson of Land Bank’s board, told parliament’s Portfolio Committees on Finance and Agriculture, Forestry and Fisheries that the National Treasury wants to standardise the remuneration of board members of state institutions.
Dr Mohammed Karaan, dean of the agri-sciences faculty at Stellenbosch University, is one of the non-executive board members. He confirmed the pay cuts. “It is a signficant reduction,” he said.
“The chairperson’s remuneration is being brought down to just over R500 000 and the other directors will face cuts of similar proportions. The remuneration has historically been out of line and this is a start to pull it back in line. It has the full support of the board. The board sees it as the right thing to do.”
Dr Karaan said he did not expect this would pose a risk either to the bank’s stability or of board members leaving. “Much of the bank’s stabilisation is driven by management and board members will enjoy the success of the strategic importance of the bank.”
Non-executive Land Bank members received higher levels of compensation than their colleagues at other state-owned enterprises, as the bank’s turnaround strategy relied on securing the right people for key jobs.
Now that the bank is on a more even keel, the Treasury has indicated salaries could be revisited. At the end of the 2011 financial year, Land Bank’s board consisted of 10 members: nine independent non-executive directors and one executive director.
Dr Ngubane could not be reached for comment. However, the bank’s 2010/11 annual report indicates that as at the end of March 2011, his remuneration package totalled R968 000 a year, while other chairs earned between R288 000 and R489 000 a year. In all, remuneration for non-executive directors amounted to R4 572 000 a year.
Currently in its third year of a four-year restructuring, Land Bank is starting to produce results and received a clean audit from the Auditor-General for the 2010/11 financial year. Treasury spokesperson Bulelwa Boqwana said that in 2005, the Department of Public Enterprises submitted the State Owned Entity Remuneration Guideline (SOERG) to Cabinet, to help boards and remuneration committees calculate packages, based on each entitity’s asset base and revenue.
“Cabinet endorsed the guideline and recommended that it be applied by other state-owned entities.” Boqwana said. – Robyn Joubert