Relationship between executive pay and company financial performance in South African state-owned entities

Carlson, Craig S.; Bussin, Mark

doi:10.4102/sajhrm.v18i0.1211

Cited by 9 publications

(20 citation statements)

References 27 publications

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“…It should be noted that inflation was not considered as research investigating the relationship between CEOs' remuneration and company performance used nominal data and not constant data (e.g. Carlson & Bussin, 2020).…”

Section: Key Resultsmentioning

confidence: 99%

“…The descriptive statistics further suggest that even though SOEs financial performance declined in the years after the economic crisis (except for turnover and liquidity), CEOs' remuneration increased. It is interesting to note that Carlson and Bussin (2020) in their study in the SOE environment, observed an average growth in total CEOs' pay of 28.68% over the period 2009 to 2016. This could suggest that South African SOEs did not have a good corporate governance practice in place regarding the level or structure of CEOs' remuneration.…”

Section: Descriptive Statisticsmentioning

confidence: 97%

“…These authors found a positive relationship between remuneration and performance using absolute profitability measures, such as earnings before interest and tax and depreciation and amortisation and net profit). Carlson and Bussin (2020), also whilst conducting a study within schedule 2 SOEs, http://www.sajbm.org Open Access observed a weak positive relationship between total pay with net profit or loss. Ngwenya and Khumalo (2012) studied the relationship between CEOs' remuneration and financial performance amongst five South African SOEs that fall under the DPE and five that do not fall under DPE during the period 2009-2011.…”

Section: Empirical Evidence On Chief Executive Officers' Remunerationmentioning

confidence: 99%

“…It could be expected that the PFMA, the Companies Act (Republic of South Africa, 2008) and King IV amongst others, would ensure increased regulation and monitoring of SOEs. These regulations and code will increasingly make it difficult for CEOs not to be remunerated according to performance as they give a clear indication that executive remuneration should align with company (SOE) performance (Carlson & Bussin, 2020). Thus, the hypothesis is that there exists a positive association between CEOs' remuneration and SOE performance pre-, during and post-economic crisis:…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…State-owned-enterprises are not registered on the JSE, with a small number of SOEs providing LTI schemes (Bezuidenhout et al, 2018). Furthermore, the erratic nature of LTI pay-outs (Carlson & Bussin, 2020;Kirsten & Du Toit, 2018) would have introduced unsubstantiated influence during the research period.…”

Section: Exclusionsmentioning

confidence: 99%

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The effect of the economic crisis on pay-performance link in South African state-owned enterprises

Bezuidenhout

2021

South African Journal of Business Management

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Purpose: The dissatisfaction with executive remuneration worldwide has increased because it is generally believed to have been instrumental to the 2008 Global Economic crisis. Central to this is the apparent unsatisfactory relationship between business performance and chief executive officer (CEO) remuneration. The primary aim of this study was to compare the pay-for-performance association between CEOs’ remuneration and state-owned entity performance before, during and after the economic crisis. It did so by assessing the chief executive remuneration link with state-owned enterprise performance from the period 2006 to 2014.Design/methodology/approach: Twenty-one schedule 2 state-owned enterprises in South Africa. This quantitative, longitudinal study, obtained secondary data from the annual reports of state-owned enterprises from the period 2006 to 2014. Ordinary least square multiple regression analysis was used as the principal statistical method.Findings/results: The findings indicate that the link between chief executive remuneration and state-owned entity performance demonstrated different patterns in the pre- and post-crisis periods.Practical implications: State-owned entity remuneration committees should place more emphasis on the financial efficiency measurements to enhance efficiencies in South African state-owned enterprises. Shareholders and regulators should take cognisance of measures to be used to assess the potential performance of state-owned entities, through executive remuneration, especially during an economic crisis. Findings could furthermore be of importance to other academics investigating this phenomenon.Originality/value: This research provides additional knowledge to the limited research available on SOEs in South Africa. Further, it reveals that an economic downturn affects the link between CEOs’ remuneration and SOE performance. This addresses a knowledge gap concerning the pay-for-performance link in South African SOEs and in emerging economies in general.

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Section: Key Resultsmentioning

confidence: 99%

Section: Descriptive Statisticsmentioning

confidence: 97%

Section: Empirical Evidence On Chief Executive Officers' Remunerationmentioning

confidence: 99%

Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Exclusionsmentioning

confidence: 99%

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The effect of the economic crisis on pay-performance link in South African state-owned enterprises

Bezuidenhout

2021

South African Journal of Business Management

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Determining standard functional structures for hospital management boards in central hospitals: Evidence of a developing economy

Funhiro

Yalezo

Mutambara

2022

CGOBR

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Zimbabwe’s health service delivery has attracted media attention for three successive decades due to failure by public hospitals to deliver effective service with the blame leveled against the hospital management boards (HMB). Responding to the criticism, the Ministry of Health introduced reforms on public hospital governance practices towards ensuring an effective health delivery system. This was done by improving the structural capacity of hospitals to deal with the increasing demand for health services (Moyo, 2016; Sikipa, Osifo-Dawodu, Kokwaro, & Rice, 2019). Thus, the study sought to determine the standard functional structures within HMBs of Zimbabwe’s 6 central hospitals. To achieve this, the study used a mixed research design in which 66 board members responded to the questionnaire while 9 purposively selected board members were interviewed, respectively. The study revealed that public hospitals require standard functional structures in order to be effective. These include a functional board that has sub-committees, a policy to evaluate the performance of CEOs, and the board itself. Frequency of board meetings, setting of agendas, succession planning, and alignment of goals with interests of various stakeholders. Implementing such functional structures enhances would standard functional structures for hospital management boards in central hospitals

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Incentive Executive Compensation Management System: A Literature Review

2022

2022 2nd International Conference on Management Science and Industrial Economy Development (MSIED 2022)

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Senior executives control the operation of the enterprise. Whether the executive compensation management is reasonable and whether it can meet the needs of executives will directly affect the operation efficiency and management efficiency of the whole enterprise. In modern enterprises, the separation of ownership and management is a major feature, and the emergence of agency issues is inevitable, mainly due to adverse selection and moral hazard under the background of information asymmetry. Determining executive compensation by evaluating corporate performance, on the one hand, can mobilize the enthusiasm of executives; on the other hand, it can effectively reduce the agency cost caused by information asymmetry. Based on the principal-agent theory, this paper firstly discusses the agency problem caused by the information asymmetry between shareholders and executives, and then points out that executive compensation, as an incentive means, can effectively alleviate the agency conflict. Previous studies have shown that there is a positive correlation between executive compensation and corporate performance. Then, this paper summarizes the research on the compensation dispersion and compensation stickiness in executive compensation management, so as to put forward some considerations and suggestions for the design of executive compensation management system. Finally, it makes a summary and puts forward the prospect of future research on the shortcomings of existing studies.

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Relationship between executive pay and company financial performance in South African state-owned entities

Cited by 9 publications

References 27 publications

The effect of the economic crisis on pay-performance link in South African state-owned enterprises

The effect of the economic crisis on pay-performance link in South African state-owned enterprises

Determining standard functional structures for hospital management boards in central hospitals: Evidence of a developing economy

Incentive Executive Compensation Management System: A Literature Review

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