Executive directors’ remuneration of leading South African companies often attracts the attention of the press, shareholders and unions. The research on which this article is based investigated whether executive directors’ remuneration of the Top 100 companies listed on the Johannesburg Securities Exchange (JSE) is influenced by the implementation of certain corrective corporate governance measures. The remuneration of executive directors was regressed on a number of firm and corporate governance characteristics to determine whether these characteristics have an influence on executive directors ’remuneration. It was found that corporate governance reforms relating to institutional ownership, the number of non-executive directors on the remuneration committee, shareholder voting on the remuneration policy and the number of remuneration committee meetings act as an effective governance tool to protect shareholders’ interests with regard to some of the elements of executive directors’ remuneration.
In terms of the new Dividends Tax, which came into effect on 1 April 2012, Dividends Tax may be the liability of the beneficial owner of the dividend. This makes it important to correctly identify the beneficial owner. The term beneficial owner is specifically defined in section 64D of the Income Tax Act No. 58 of 1962 as ‘the person entitled to the benefit of the dividend attaching to the share’, yet a distinct difference remains between the legal ownership and economic ownership of the share. Within a South African context, determining the beneficial owner within a discretionary trust might be problematic. The trustees are the legal owners of the shares, whilst the beneficiaries might be the economic owners of the shares. Further, consideration has to be given to the timing of the dividend distribution. This article formulates steps to determine which person is entitled to the benefit of the dividend attached to the share.
Institutional ownership in companies is an important tool in monitoring and controlling the business interests of the shareholders. This study investigated whether the performance of the Top 100 companies listed on the Johannesburg Securities Exchange is influenced by the level, and stability of institutional ownership. A regression analysis was used to test the relationship between Tobin’s Q and return on assets and the international, domestic and total institutional ownership and the stability of institutional shareholding. It was found that institutional shareholding is an important corporate governance factor to improve firm value. International institutional shareholding has an effect on future firm value, whilst domestic institutional, total institutional shareholding and the stability of total institutional shareholding has an effect on historical firm value.
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