The COVID-19 pandemic and the pay-performance nexus among Johannesburg Stock Exchange – Listed companies

Abstract

Background: Executive remuneration has long been linked to company performance as a mechanism to align managerial and shareholder interests. However, crises such as the COVID-19 pandemic have raised questions about the robustness of this alignment, particularly in emerging markets where governance mechanisms are still maturing.
Aim: This study investigates how COVID-19 affected the relationship between executive pay and firm performance among companies listed on the Johannesburg Stock Exchange (JSE).
Setting: The analysis focuses on 222 JSE-listed companies spanning multiple sectors in South Africa, observed over a 10-year period from 2015 to 2024.
Method: A quantitative, non-experimental panel design was applied using secondary data. Multiple regression models tested the relationship between executive remuneration and firm performance (Return on Assets, Return on Equity and Tobin’s Q), controlling for firm size and leverage. A COVID-19 dummy variable and interaction terms assessed pandemic effects.
Results: The results indicate a weak association between executive remuneration and firm performance and show that while executive pay increased during the COVID-19 period, the sensitivity of pay to performance did not change significantly.
Conclusion: The pandemic coincided with higher executive pay but no significant change in pay-performance sensitivity, indicating persistent governance weaknesses and limited incentive alignment.
Contribution: The study provides novel empirical evidence on how executive remuneration behaves during a systemic global crisis in an emerging market context. Its originality lies in a 10-year panel spanning pre-, during- and post-pandemic periods and the use of multiple estimation strategies, contributing to debates on incentive alignment, corporate governance resilience and pay-for-performance integrity.