Director Remuneration Disclosure: Navigating the Tension Between Transparency and Privacy

By Parmi Natesan, CEO of IoDSA

Recent amendments to the South African Companies Act have brought renewed focus to the issue of director remuneration disclosure. The changes now make it clear that companies that are obliged to prepare audited annual financial statements must disclose the individual remuneration of each director and prescribed officer, all of whom must be named. This is a shift from previous interpretations where some companies anonymised such disclosures to protect personal privacy, referring instead to roles such as “Director 1” and “Director 2”.

While the objective of transparency is clear and aligns with international governance standards, the specific requirement to name each individual director alongside their remuneration has raised some concerns—particularly in the South African context.

During the consultation process on the Companies Amendment Bill, some stakeholder submissions raised alarms about the potential unintended consequences of this disclosure requirement. It was argued that in a country facing severe violent crime, including a growing trend in kidnappings for ransom, disclosing large earnings attached to identifiable individuals could pose a significant security risk.

The Department of Trade, Industry and Competition (DTIC), in responding to these concerns, acknowledged the tension but emphasised that the right to privacy is not absolute. They argued that this right can be lawfully limited in the service of greater transparency and accountability—particularly for individuals occupying positions of public trust, such as company directors. The stance taken was that holding such a position carries with it public accountability responsibilities, including the expectation of openness about remuneration.

From a legal standpoint, the Protection of Personal Information Act (POPIA) does not prohibit the processing of personal data such as remuneration, where such processing is required by law or serves a legitimate interest. The Companies Amendment Act provides a clear legal basis for the required disclosures, and the drafters of the legislation appear to have considered the implications in terms of POPIA compliance. As such, it would seem that the requirement to disclose remuneration by name is legally permissible within South Africa’s data protection framework.

Nevertheless, companies must contend with the real-world consequences of this level of disclosure. Concerns about personal safety and the targeting of high-net-worth individuals are not theoretical in the South African environment. High-profile kidnappings and ransom demands have increased in recent years, with law enforcement and private security firms confirming that individuals perceived to be wealthy are often targeted. In this context, the publication of remuneration linked to named individuals may elevate the personal risk profiles of directors and prescribed officers.

Opponents of the name-specific disclosure requirement argued that there is no additional governance benefit gained by naming individuals versus anonymised disclosures. While transparency about remuneration levels can be achieved without necessarily tying them to specific names, the law now mandates otherwise.

Another risk flagged by stakeholders is the potential impact on competition for executive and board talent. Publicly disclosing named remuneration figures could make high-performing directors and executives easier targets for poaching by competitors, both locally and internationally. Competitors would gain valuable insights into an individual’s current remuneration, enabling them to tailor offers more precisely and aggressively. In a market where experienced, ethical leadership is already in short

supply, such mobility could have broader implications for organisational stability and succession planning. While transparency serves important governance objectives, it may inadvertently place companies at a disadvantage when trying to retain their key leadership talent.

Taking these issues into consideration, boards should consider steps to mitigate the potential risks. These could include reviewing personal security arrangements for affected individuals, engaging with directors and officers on safety concerns, and ensuring that internal policies around data handling and public disclosure are aligned with both the letter and spirit of the law. In addition, boards should be proactive in addressing the potential talent risks created by greater remuneration transparency. This could involve reviewing retention strategies, enhancing succession planning processes, and ensuring that remuneration structures remain competitive and defensible to deter unwarranted poaching of key individuals. In doing so, companies can better safeguard not only the personal security but also the organisational resilience that effective leadership provides.

The broader governance imperative remains – fair and responsible remuneration that is transparent and defendable. Enhanced disclosure can help restore trust, align remuneration with performance, and empower shareholders to exercise informed oversight. At the same time, the practical realities of South Africa’s socio-economic and security landscape cannot be ignored.

In navigating this complex environment, companies will need to balance their legal obligations with sensitivity to the human risks involved. While transparency is rightly non-negotiable in a modern governance framework, implementing it responsibly—without overlooking the potential for unintended consequences—remains a critical consideration.