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2. On the Detailed Directors Report for X, Y & Z the Average value for the Benefits is higher than the Upper Quartile. How is this possible?
This is most propapbly caused by one or two companies in that industry and category that pays the person in the relevant position a much higher salary than the other companies.
For example, at one point in November 2007 you would have been presented with the following report if you looked at CEO's for All Industries in Category 13&14:
All Industries, CEO Reward
Company
Size | Market
Position | Base
(Cash) | Value of
Benefits | Guaranteed
Package
(GP) | Short
Term
Incentive | Total
Annual
Based
Reward | STI as %
of GP | | Cat 13&14 | | C8:3400-4700 | | Hay:4000-6000 |
| Upper Quartile | 5,035,000 | 2,394,000 | 7,880,000 | 7,000,000 | 14,429,000 | 94.23 | | Median | 4,227,000 | 1,576,000 | 5,576,000 | 6,099,000 | 11,902,000 | 105.10 | | Lower Quartile | 3,848,000 | 644,000 | 4,695,000 | 2,400,000 | 6,892,000 | 53.43 | | Average | 4,824,998 | 2,770,185 | 7,595,183 | 5,827,058 | 13,422,241 | 76.72 | | | Sample size : Base 15, Benefits 15, STI 14 | | |
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This looks wrong! For example, how can the Average of the Benefits be more than the Upper Quartile?
The following table shows the underlying data:
| Company |
Benefits |
| Anglo Platinum Ltd |
R 15,715,553.00 |
| Impala Platinum Holdings Ltd |
R 5,448,000.00 |
| Old Mutual plc |
R 4,350,971.50 |
| AngloGold Ashanti Ltd |
R 3,195,000.00 |
| The Bidvest Group Ltd |
R 2,394,000.00 |
| FirstRand Ltd |
R 1,728,000.00 |
| Tiger Brands Ltd |
R 1,718,000.00 |
| Remgro Ltd |
R 1,656,000.00 |
| Barloworld Ltd |
R 1,576,000.00 |
| Absa Group Ltd |
R 892,130.00 |
| Standard Bank Group Ltd |
R 891,000.00 |
| Gold Fields Ltd |
R 746,120.00 |
| MTN Group Ltd |
R 644,000.00 |
| Sanlam Ltd |
R 358,000.00 |
| Nedbank Group Ltd |
R 240,000.00 |
| Average |
R 2,770,184.97 |
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The Upper Quartile, Median and Lower Quartile are highlighted and the black line shows where the calculated average would fit in the ranking--above the Upper Quartile!
In this case it is the high value of the Benefits of the Anglos CEO that skews the data. It sometimes happens that the data is skewed when remuneration is converted from
a foreign currency to ZAR, but it is not true in this case.
This same kind of thing can happen in any of the remuneration areas, Guaranteed Package, Short Term Incentive and Base.
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