Mboweni gets 27.5% pay hike
by Andrew Smith on 05/09/08 at 10:10 am
12 comments
You either have to laugh or cry when reading this story on Fin24 about Tito Mboweni’s recent pay hike:
Central bank governor Tito Mboweni received a 27.5% pay rise this year, above the country’s 3% to 6% inflation target, the Reserve Bank’s annual report showed.
His annual pay, including fringe benefits, stood at R3.387m in 2007 and, with pension and medical contributions, the total package was R3.796m.
All of the salaries were decided by a separate remuneration committee chaired by an independent non-executive board member, on the recommendation of an external panel, the central bank said.
Remember that this is the man who’s primary responsibility at the Reserve Bank is keeping inflation in check, and who has often advised that salary increases fuel inflation, and that we all need to tighten our belts.
I listened to the head of the remuneration committee on the radio last night, explaining that Mboweni had received 4% raises for the last 8 years (the median of the inflation target), but this year the committee decided that he needed to do some catching up. I suppose that’s like dieting by eating fruit for breakfast and salad for lunch, and then a 5 course buffet for supper because you’ve been so good all day. Mboweni obviously didn’t resist, and I don’t blame him – in 2007 he earned a nearly breadline R2.976m.
The usual justifications revolve around how much more he would be earning in a corporate bank. He is compared with Jacko Maree, CEO of Standard Bank, who earned a total R18.63m in 2007. I’m not sure I buy that logic – would he actually get the top job at Standard Bank if he applied? Did he earn his current position through raw skill or political maneuvering?
I also find it slightly odd that our nation’s president, Thabo Mbeki, earns about half of what Mboweni does. Who has the greater responsibility? Would the leader of our country not be able to lead any corporate company he wanted to? Probably not.
Remuneration Committees and inflation matching salary increases seem like a foreign world to the small business owner. My raise this year will be determined by how much profit makes it into the bank account. Hard to argue with that!
Andrew Smith is the pedantic systems guy behind Live Alchemy, a SA e-commerce company. Andrew writes for Ideate in an attempt to make the world a more efficient place. View more articles by Andrew Smith.
Fred
Sep 5th, 2008
Hey Andrew, thanks for ruining my morning.
This is blood-stirring stuff.
Not sure whether to laugh or cry at how staggeringly hypocritical it is. It makes me want to put a shot of whisky in my coffee.
In fact…
gmk
Sep 5th, 2008
At least its a vaguely independent process unlike those bastards in parliament who vote on there own pay rise if i am not mistaken.
That said – telling everyone to tighten your belt and then rolling off with close to 4 bar a year is a bit annoying.
As for that cnut from Standard Bank, i will be doing my bit to cut into his bottom line by changing banks next month.
Probably won’t register, but at least i’ll feel better
Rob
Sep 5th, 2008
Hey Andrew
I agree, this sucks. But I disagree on your comment that his main goal is to keep inflation in check. His main goal (as the head of a privately owned institution) is to maximise profit for his shareholders.
Keeping inflation in check is the excuse they use to allow them to increase interests rates (and therefore their profits) whilst increasing the money supply which itself fuels inflation.
This rabbit hole goes much deeper than anyone really wants to acknowledge.
Neil
Sep 5th, 2008
I’m not complaining.
I can’t afford to have an unhappy central bank governor.
Barefoot Billionaire
Sep 7th, 2008
I have absolutely no problem with Tito’s pay raise. Can’t believe he settled for only 4% per year for 8 years. On average, people can expect actual inflation plus 2% incereases. (Or that’s what we based our UK pensions review calcs on for the UK population.) He must have fallen more than 30% behind his peers over the past 8 years!
From a PR perspective, it might have been wiser if he just took 6% per year, but those would still not have been competitive increases.
Jacques
Sep 7th, 2008
I feel sick being a standard bank client. Does the CEO really need 18 million, couldnt they rather lower their bank charges… like I always say to them on the phone, you are definitely standard bank, not a great bank!
Jon
Sep 9th, 2008
What a great post, Andrew. I can feel the Smith venom rising from here!
I must say after hearing this I’d be more inclined to reverse over Tito, once hitting him with my car.
Before I go and stalk our top politicians, does anyone know if this only in SA, what does the geyser in UK earn or USA? Would be good to know?
BB @ www.morethanmoney.co.za
Sep 9th, 2008
How Tito’s salary compare to his international peers:
http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71619?oid=102312&sn=Detail
Andrew
Sep 17th, 2008
@Rob I admit to not being an expert on these matters (perhaps I shouldn’t even be writing about them?), but I’m not sure if describing the Reserve Bank as a “privately owned institution” that aims to “maximise profit for its shareholders” is the full picture. According to this article on Fin24, the Reserve Bank’s mandate to fight inflation is written in to our constitution:
http://www.fin24.com/articles/default/display_article.aspx?ArticleId=_2394605
Perhaps someone else can point us to an article that clearly defines how the Reserve Bank and the government operate together? It would also be nice to hear an economist explain where the extra money from increased interest goes. I’ve heard it described as “only going to the country’s balance sheet, and not affecting profit or loss”. But what that actually means is beyond me!
Jon
Sep 17th, 2008
Thanks for this article BB, puts things int here place. Amazing that, ‘the Governor of the Bank of England; who, incidentally, recently turned down a substantial salary increase because, The Telegraph reported, “he did not feel it was appropriate in the current economic climate.”
To me, this goes to show that I actually don’t want Tito not o get a raise, but i want him to think like the geyser from the bank of England. Instead of being another fat cat African leader, with nothing but self interest dangling in front of his nose.
I’m now going to buy a bigger car, so to avoid the fat cat from being stuck under my car.
Barefoot Billionaire (BB)
Sep 17th, 2008
Very funny, Jon. Maybe part of Tito’s salary is danger pay because of drivers like you…
Jon
Sep 17th, 2008
That could be true…ha ha