Original Research

Financial indicators of company performance in different industries that affect CEO remuneration in South Africa

Mark Bussin, Chris Blair
South African Journal of Economic and Management Sciences | Vol 18, No 4 | a1249 | DOI: https://doi.org/10.4102/sajems.v18i4.1249 | © 2015 Mark Bussin, Chris Blair | This work is licensed under CC Attribution 4.0
Submitted: 02 November 2014 | Published: 27 November 2015

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Mark Bussin, University of Johannesburg, South Africa
Chris Blair, UNIVERSITY OF CUMBRIA, United Kingdom

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Abstract

In an attempt to address the growing gap between chief executive officer (CEO) remuneration and that of the general worker, reign in rising CEO remuneration, and justify the portion of long-term incentive pay that makes up the bulk of CEO remuneration, shareholders and other stakeholders are trying to find definitive factors that will link CEO remuneration to company performance. Finding this link has become central to all executive remuneration issues. The results of the studies linking CEO remuneration to company performance are varied and inconclusive, particularly in South Africa. The reason for this is that previous studies have not looked at whether the company performance measures chosen have definite relationships with CEO remuneration in each industry. This study investigated eleven financial indicators of company performance to determine which of them have significant and positive relationships to CEO remuneration in different industries in South Africa. 254 South African listed companies, spread over 5 industries, were analysed for the period 2008 to 2012 using panel data analysis and statistical tests. The results were conclusive, finding performance metrics that had a positive and significant relationship to CEO remuneration in 4 of the 5 industries investigated, as well as over the aggregate of all the industries.


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Crossref Citations

1. Share-based incentives for South African CEOs: Trends 2002−2015
Gretha Steenkamp, Nicolene Wesson
South African Journal of Accounting Research  vol: 32  issue: 1  first page: 46  year: 2018  
doi: 10.1080/10291954.2017.1409869