Shareholder Compact Agreement

“The state shareholders` agreement will clearly articulate the shareholder`s strategic intention to clearly articulate both the parapublic and strategic objectives, performance indicators and objectives of the parastatal company,” Maele said. Presentation by the Ministry of Public Enterprise The delegation of the Ministry of Public Enterprises (DPE) was chaired by Ms Matsietsi Mokholo, Deputy Director General of Law and Governance. In an overview, Ms Mokholo said that the commission`s information included the legal context of the shareholders` agreement; the government`s policy objectives for state-owned enterprises (SOCs); an update of the logical framework for planning, monitoring and evaluation; the key components of compacts; performance within the agreed objectives; and a status update to the SOC Compacts portfolio. The Shareholder`s Compact was a statutory performance assessment card between the executive authority, which was the Minister of State Enterprises, and the accounting authority, which was the SOC`s board of directors. In accordance with the cash regulations, all SOCs must enter into a shareholders` agreement with the executive each year. The pacts have documented the mandate, the main performance indicators and the indicators to be achieved and aim to define clear objectives in terms of performance indicators and financial, operational and socio-economic performance objectives. Ms. Mokholo told the committee that the policy that defines the government`s national economic development priorities and informs shareholders` pacts includes the performance evaluation framework, the national growth trajectory and the industrial policy action plan. At the departmental level, the DPE implemented the planning, monitoring and evaluation of the framework, which worked on annual and quarterly programmes and evaluations. Shareholder`s Compact was the main governance instrument that defined the mandate, shareholder expectations, strategic objectives as well as the main areas and performance objectives to be achieved by the SOCs.

While there were standard components of Shareholder`s Compacts, there were also SOC-specific components, as a size in this context was not suitable for everyone. Different components of the components of the compacts have been sketched. With regard to the performance of the portfolio for the year ended 31 March 2012, Orcilla Ruthani, Chief Executive Officer of the DPE, stated that of the eight SOCs, only Eskom had recorded an improvement in the level of non-achievement of the planned targets. South African Airways (SAA), South African Express (SAX) and Alexkor had seen declines in achieving planned targets.. . . .

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