South African companies are entering their first reporting cycle under the new remuneration provisions of the Companies Act, but meeting the legal requirements alone may not secure shareholder support.
Martin Hopkins, Master Reward Specialist and member of the South African Reward Association (SARA), says companies need to earn shareholder confidence before putting their remuneration policies and reports to a vote.
“The amendments, which came into force on 22 May 2026, fundamentally change the way companies need to think about remuneration governance,” says Hopkins. “The focus is no longer simply on producing a remuneration report. Companies now need to produce policies that shareholders are prepared to support.”
Binding remuneration policies raise the bar
A company’s remuneration policy is now binding and must receive shareholder approval through an ordinary resolution every three years.
Companies need to give shareholders enough information to make an informed decision while ensuring the policy remains workable throughout the three-year period.
“The challenge is getting that balance right,” says Hopkins. “Too much detail can make a policy difficult to apply over three years. Too little may not give shareholders enough confidence to support it.”
Hopkins says policies must cover matters previously left to remuneration committee discretion. These include annual increases, remuneration offers to new executives, sign-on awards and termination payments.
Companies urged to engage shareholders early
Hopkins believes companies should begin engaging shareholders before their annual general meetings.
Remuneration committees should review concerns raised in previous years, consult major shareholders before publishing remuneration reports and assess support for proposed policy changes.
“Early engagement gives companies the opportunity to understand shareholder expectations and resolve concerns before they become shareholder objections,” he says.
Failed votes carry consequences for committee members
The amendments place greater accountability on remuneration committee members when shareholders reject a remuneration report.
Committee members must stand for re-election to the committee and explain the reasons for shareholder dissatisfaction at the next AGM.
If shareholders reject the implementation report for a second consecutive year, members who served throughout the reporting period must leave the remuneration committee for at least 24 months.
“A loss of experienced committee members can be disruptive at a time when remuneration governance expertise is already in short supply,” says Hopkins.
New pay gap disclosures add complexity
Companies must also prepare for expanded remuneration reporting requirements.
The new disclosures include the remuneration of the highest and lowest paid employees, average and median employee remuneration, and the ratio between the highest and lowest paid five percent of employees.
Hopkins says companies need to consider these disclosures carefully because the Companies Act applies the Labour Relations Act’s broad definition of an employee.
This definition includes learners, apprentices, part-time employees and those who worked for only a short period.
“Companies need to present this information in a way that gives shareholders a meaningful understanding of their remuneration practices,” he says.
Remuneration reporting goes beyond compliance
Hopkins says boards should avoid treating the amendments as another compliance exercise.
“These changes increase accountability and make clear, honest communication with shareholders more important than ever,” he says. “Boards and remuneration committees should be working now with management, advisers and shareholders to address concerns and build support for their remuneration policies well before their next AGM.”
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