Standard Bank Group Chief Executive Jacko Maree has committed 10% of his taxable income towards helping needy black scholars receive an excellent education. He will be doing this every year, at least for as long as the current personal tax structure remains broadly unaltered.
"Against the backdrop of the current national debates about privilege, executive pay, poverty and inequality, I have decided to take the unusual step of making my personal social contribution known. I am sensitive to the fact that there is a wide community of caring South Africans, including many business leaders, who contribute generously but silently towards confronting poverty and inequality in our country," said Mr Maree.
Mr Maree currently gives 10% of his taxable income towards education, but going forward this will be directed specifically towards helping needy black scholars.
He said that as a long-standing chief executive of one of South Africa's oldest and largest companies, he works hard towards the ongoing success of the Standard Bank Group, which is a key role player in the long term growth of South Africa. Standard Bank provides productive employment for more than 50 000 people and creates wealth in South Africa and across the continent.
"For this work, I am highly paid, especially when seen through the eyes of South Africans who have been deprived of opportunities, are poor, or unable to find employment. I willingly pay my fair share of various taxes. Beyond that obligation, however, I choose to do more as a business leader and privileged South African, especially in these difficult times."
Responding to the contentious debate about high executive pay, Mr Maree said that poverty and inequality are probably the two biggest threats to South Africa's stability. "I am a firm believer that a market driven economy gives us the best hope of tackling these huge challenges. Successful large and small businesses, which are able to compete effectively, will create productive jobs over time, enabling more of our people to earn better incomes in the years ahead."
He said that as a banker, he had interacted with companies in many different industries throughout his career. "I have observed that it is typically a relatively small number of key employees who, by taking and then implementing important decisions effectively, significantly influence the success of any business. These individuals are mobile and in high demand, both locally and beyond our borders. Most of them are motivated primarily by reasons unrelated to pay. But they also expect to be paid fairly and competitively. The question is how to determine their appropriate levels of pay."
Mr Maree said that Standard Bank paid some of its employees amounts which might seem overly generous. These pay levels are the direct consequence of believing in the merits of a market driven economy where, over time, supply and demand determine the price, not only of goods and services, but also of business skills and talent.
Ultimately shareholders bear the cost of high executive pay. Companies should rely on good corporate governance, strong, independent and well-informed remuneration committees, increased disclosure in annual reports, interactions with major shareholders, and votes at annual general meetings to define paypolicies.
If society-at-large nevertheless demands that executive remuneration should somehow be further moderated, the easily implementable action would be to increase the tax rate on that portion of pay which is deemed to be unfairly high.
Mr Maree said that such action, or other initiatives to regulate individual pay based on widely differing perceptions of 'fairness', will have unintended and far-reaching negative consequences.
"One of South Africa's enduring strengths is a large core of people who care about poverty, poor education and lack of opportunity. However, charity is not the long term answer. The creation of the many jobs required will only be achieved through many successful large and small businesses working in concert with government. Skilled, energetic and entrepreneurial leaders, who are rewarded competitively, are a vital ingredient in achieving this national goal," said Mr Maree.
- Jacko Maree has been Chief Executive of Standard Bank Group since 1999
- Mr Maree did not feature on the Business Times' list of "The Big Earners"