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FirstRand’s Nxasana Is South Africa’s Best-Paid Bank CEO

FirstRand Ltd.’s Sizwe Nxasana was South Africa’s highest-paid bank chief executive officer after the nation’s second-largest financial-services company more than doubled its full-year profit following the sale of assets.

For fiscal year 2011, Nxasana, 54, received a total of 38 million rand ($4.8 million), which included a salary and bonus package of 15.1 million rand, a deferred bonus of 4.5 million rand and a gain from a share trust of 18.4 million rand, according to the Johannesburg-based company’s annual report, published Nov. 3. Nxasana’s share-trust payment stems from his original appointment grant, said Sam Moss, the lender’s spokeswoman, adding Nxasana was awarded another 892,066 shares in 2010, a third of which will vest next year.

At today’s price those 892,066 shares are potentially worth another 17.3 million rand to Nxasana, bringing the total value of his awards in fiscal 2011 to 55.3 million rand.

Nxasana, CEO since January 2010, having joined the group in 2006, was awarded a package valued at 45 million rand last year. His compensation topped that of Africa’s largest bank, Standard Bank Group Ltd., which increased the pay of CEO Jacko Maree 9.7 percent in 2010 to 6.53 million rand. Nedbank Group Ltd. raised CEO Mike Brown’s total compensation 63 percent in 2010 to 12.46 million rand and Absa Group Ltd. more than doubled CEO Maria Ramos’s pay and incentives to 27.5 million rand after the lender’s profit rose 19 percent.

Asset Sales

While FirstRand’s 2011 fiscal year ended on June 30, South Africa’s other big four banks report on a calendar-year basis.

On Sept. 13, FirstRand said it would pay a special dividend of 70 cents per share after net income rose to 20.1 billion rand in the 12 months through June, from 9.44 billion rand a year earlier. FirstRand’s first special dividend since its creation in 1998 came after the company sold its stake in insurer Outsurance Holdings Ltd. for more than 4 billion rand and spun off its Momentum Group Ltd. insurance business.

“FirstRand was the best performing of the big four banks over the past year, hence you would expect the CEO to be rewarded accordingly,” said Patrice Rassou, head of equities at Cape Town’s Sanlam Investment Management, which holds shares in the lender.

To evaluate executive pay, the bank’s compensation committee noted in the annual report that FirstRand achieved so-called normalized earnings from continuing operations of 10.1 billion rand, an increase of 22 percent, and produced a normalized return on equity of 18.7 percent. Growth in profit after tax, risk appetite, efficiencies, customer service and the empowerment of black people were other criteria used to determine executive pay, the compensation committee wrote.

Best Performer

“It’s fair to say that FirstRand has performed better than the other banks, and Sizwe is very highly regarded in the industry,” Moss said.

FirstRand rose 27 percent in Johannesburg trading in the 12 months through June, the best performer among the country’s big four banks. The six-member FTSE/JSE Africa Banks Index gained 11 percent over that period.

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