Binding votes on executive pay are here. PwC asks: are boards ready?

The Companies Act amendments that took effect on 22 May 2026 have fundamentally changed the governance of executive remuneration in South Africa.

Public and state-owned companies must now put their remuneration policies and annual remuneration reports to a binding shareholder vote, with personal consequences for remuneration committee members if the remuneration report vote fails. PwC's new report, The South African Executive Remuneration Landscape 2026: Strategic insights for leadership, examines what this means for boards navigating an environment where transparency, fairness, and global competitiveness must be balanced simultaneously.

"At face value, executive pay outcomes in South Africa appear well supported. Shareholders endorsed remuneration outcomes at an 83.8% approval rate last year. But that support was under a non-binding regime. The binding vote changes the equation entirely, and remuneration committees need to be prepared for a more demanding conversation with shareholders," says Leila Ebrahimi, Partner, Executive Reward, Tax and Legal Services, PwC South Africa.

A new voting regime with real consequences
The amendments mandate all public companies (listed and unlisted) and state-owned companies to present both a remuneration policy and an annual remuneration report for approval by ordinary resolution. The remuneration policy must be renewed every three years although it may be put to an earlier vote if required.

If the remuneration report is not approved, remuneration committee members must stand for re-election to the committee at the following AGM. A second consecutive failure bars those members from serving on the committee for two years.

The Act also introduces mandatory workforce pay disclosures, including the remuneration of the highest-paid and lowest-paid employees, average and median pay, and a wage gap ratio between the top 5% and bottom 5% of earners.

"These are not simply disclosure enhancements. This is a shift in the locus of power. Shareholders now have a statutory mechanism to hold individual committee members accountable for remuneration decisions, and that changes how every remuneration policy and report should be prepared," says Ebrahimi.

From transparency through fairness to competitiveness
The report indicates that South Africa is entering a phase characterised by greater transparency and fairness, although this transition is unlikely to be without challenges and may face resistance. Experience in more developed markets suggests that this is not the end point: over time, the focus tends to shift from transparency to fairness and ultimately to competitiveness, as the realities of a globally mobile executive talent market reassert themselves. This progression highlights the potential trade-offs involved in prioritising fairness alone. The UK's experience offers a cautionary example: restrictive approaches to executive pay are thought by some to have contributed to high-profile companies relocating their primary listings offshore.

"South Africa faces a fundamental choice," says Ebrahimi. "We can optimise for fairness in the distribution of a shrinking pie and risk seeing our best talent and companies migrate elsewhere, or we can optimise for competitiveness, grow the pie for everyone, and create conditions for broad-based prosperity, aligned with what the Companies Act amendments are aiming to achieve."

Incentive design is not keeping pace
Despite total CEO pay rising by 8% and CFO remuneration increasing by 19% year on year, the report finds a significant disconnect between how companies design incentives and how executives experience them.

PwC's local survey of South African executives reveals that while 77% view short-term incentives as effective motivators, only 39% say the same about long-term incentives, despite long-term awards often comprising the largest portion of executive pay. Complexity, delayed outcomes, and a lack of clarity on how daily behaviours connect to long-term vesting are driving this gap.

"The question for boards is whether their incentive structures are genuinely shaping behaviour or simply satisfying governance requirements. Under a binding vote regime, shareholders will increasingly be asking this," says Makhosazana Mabaso, Partner, Executive Reward, Tax and Legal Services, PwC South Africa.

The report also challenges the common practice of applying uniform incentive schemes across diverse business units, arguing that this creates unintended cross-subsidies where high-performing divisions fund incentive pools for underperforming ones, driving talent loss in the areas where it matters most.

Skills, AI, and the future of pay
As AI reshapes productivity and job content, the report makes the case for skills-based pay as a complement to traditional structures. PwC research shows that 64% of workers in Africa have used AI in the past year, outpacing the global average, yet only 35% believe their current skills will remain relevant in three years.

"Paying for skills rather than titles allows organisations to target scarce capability and adapt faster. But it must be done carefully, with safeguards to ensure fairness, access to development, and consistent measurement," says Mabaso.

Cybersecurity as executive accountability
The report also highlights the growing case for embedding cybersecurity performance in executive incentive structures. In South Africa, only 8% of organisations reported no high-impact cyber breaches over the past three years, significantly below the global average of 18%.

King V™ explicitly mandates cybersecurity as a board-level responsibility, creating a governance foundation for linking executive accountability to cyber outcomes. Yet most companies remain reactive, relying on disciplinary action after a breach rather than incentivising proactive risk management.

An expanded mandate for remuneration committees
Across all of these themes, the report concludes that the remuneration committee's mandate has expanded materially. Committees must now oversee binding policy approval, remuneration report approval, workforce pay disclosures, increases shareholder engagement, and the interface between executive remuneration and broader social and ethics obligations under King V™. They also face the personal consequences of failed remuneration report votes.

"Executive remuneration is no longer a narrow compliance exercise. Done well, it is a strategic asset supporting leadership effectiveness and organisational resilience. The window to prepare proactively is still open, but with the Companies Act amendments now in effect, the expectation to act is immediate," Ebrahimi concludes.