Johannesburg — RESERVE Bank Governor Tito Mboweni was awarded a 28% pay rise in the year to April -- four times the upper end of SA's official 3%-6% inflation target -- the Bank said yesterday.

This was in contrast with each of the previous three years, when Mboweni's pay rise was set below the upper limit of the inflation target, partly at his insistence to set an example for the rest of the country.

Bank directors said Mboweni's salary package of R3,796m -- which includes pension and medical aid contributions -- reflected "structural adjustments" after an independent review of executive pay.

Deputy governor Xolile Guma received a 66% increase, which took his earnings to R2,77m last year. The Bank's other deputy governor, Renosi Mokate, got a 73% pay hike, taking her salary to R2,8m.

Thandi Orleyn, chairwoman of the Bank's remuneration committee, said the pay hikes were agreed on the Bank's board of directors after a study that showed its executive pay packages were not in line with those at similar organisations.

"We didn't have a review of executive pay for a long time. They only received increases based on the midpoint of the inflation target," she said.

"We felt as a board it was our responsibility to have a review."

That decision was made in 2005, and board members excluding the governor and deputy governors appointed Judge Dennis Davis and Mamphela Ramphele to research the issue, with help from Deloitte, an international consulting firm.

The review looked at the executive pay packages at other central banks, commercial banks and state-owned entities in SA, and was completed in 2006, Orleyn said.

"It's taken that amount of time to carry out the process, and we believed it was incumbent on us to bring our executive pay into line with the market," she said.

Both Parliament and Finance Minister Trevor Manuel were informed about the structural pay adjustment, and accepted the way it was carried out, another nonexecutive director at the Bank said.

But the decision is likely to cause a stir among trade unions as Mboweni and other Bank officials have often cited steep pay increases as a threat to the medium-term inflation outlook.

Inflation measured by the annual rise in CPIX has breached the upper end of its target for 16 months running, rising by a record 13% in July.

But figures from the Bank's quarterly bulletin yesterday showed that pay settlements are still lagging well behind inflation, rising by an average 8,3% in the first half of this year.

That compares with a rise of 6,8% in the year before. Public sector employees got bigger pay rises due to a contractual agreement, which says they must be a percentage point above CPIX.

In the previous fiscal year, Mboweni's annual pay rise amounted to 5,2%, up from 4,5% the previous year and 4,0% in the year before that.

The Bank has raised interest rates by five percentage points since June 2006, citing the need to curb the "second-round" effects of rising prices. It says these include inflation expectations, which "tend to feed rapidly into wage and price setting".