This dissertation presents empirical evidence intended to help answer two research questions. The first question asks whether executive compensation systems appear to exploit the bias in accounting-based performance measures in order to reduce the volatility in executive compensation and to allocate incentives more effectively across the range of activities performed by the executive. The second question asks whether compensation systems systematically differ between firms that use alternative accounting methods and whether any such systematic difference helps explain accounting choice. Parameters estimated in fixed-effects endogenous switching regression models were used to test the risk-shielding and incentive-allocation hypotheses. The models were estimated across a dataset consisting of 1151 executive-year observations of annual compensation paid to 222 top-level executives in 40 oil and gas firms. The dataset was partitioned by accounting method and separate models estimated for the full cost and successful efforts partitions. The tests provided modest support for the risk-shielding and incentive-allocation hypotheses, revealing that accounting measurement bias is used to focus incentives for effort in the exploration activity and to reduce executives' exposure to production risk. The design also allowed an estimate of the proportional change in compensation that was realized from the accounting choice actually made.

This paper studies foreign currency adjustments in executive compensation (i.e. exclusionof foreign currency impacts from accounting-based performance metrics). In light of recent debates on the pros and cons of using non-GAAP adjustments in compensation, I propose a rational explanation for adjusting foreign currency concerning firm’s operating decisions. I employ real options theory to study foreign currency fluctuations in decision making. I show, both analytically and empirically, that Integration Level, the extent of coordinated activities or cross-border transactions between the parent and its foreign subsidiaries, can serve as an explanation. Firms with a high level of integration are less likely to adopt foreign currency adjustments. On average, firms consider foreign currency fluctuations to make corporate decisions; the usage of foreign currency adjustments in executive compensation is less likely to be a result of managerial opportunism.

Made available in DSpace on 2015-12-03T18:35:24Z (GMT). No. of bitstreams: 1 Juliano Augusto Orsi de Araujo.pdf: 1607194 bytes, checksum: 437af69b3f75d539344632263a506a52 (MD5) Previous issue date: 2012-11-12 / The executive compensation, recently, attracted the attention of investors and society, specifically the episode \"millionaires bonus\" paid to American executives who received massive amounts of money, even presenting results unprofitable companies that country. However, a problem indeed studied in the finance literature is that of information asymmetry and the relationship between agent and principal. Normative Instruction 480 issued by the CVM which, among other norms, determined the disclosure of remuneration fixed, variable and equity-based components of members of senior management, statutory committees, audit, risk, finance, compensation, beyond the board and tax has made possible the disclosure of empirical studies on executive compensation and performance of companies present in the Brazilian stock market. The distinction of persons, owner and manager of a business is a natural tendency of the global economy in view of the possibility of having highly skilled people at the helm of a company qualified for the tasks assigned to it. Thus arises the agency problem and the problem of this research: there is a relationship between executive compensation and performance of Brazilian companies? Thus, the overall goal of the research was to determine whether there is a relationship between compensation paid to executives of Brazilian companies and the performance of these companies. Specific also aimed to present the composition of executive remuneration in Brazil, check if the variable compensation influences the outcome of Brazilian companies, identify and describe characteristics of such companies which size and sector differences between the average pay per sector, descriptive statistics about the remuneration in Brazil, to investigate the relationship between executive compensation and performance of Brazilian companies and present the literature that addresses the relationship between executive compensation and performance companies. We used panel data with the observation of fixed effects and random effects. The study showed a statistically significant positive between executive compensation and performance of Brazilian companies. Concluded that there is increased executive compensation when there is increasing return to shareholders for the year, in the previous year and second last year / A remunera????o de executivos atraiu nos ??ltimos anos a aten????o da sociedade e de investidores, mais especificamente o epis??dio de \"b??nus milion??rios\" pagos a executivos norte americanos que receberam volumosas somas em dinheiro, mesmo apresentando resultados deficit??rios ??s companhias daquele pa??s. N??o obstante, um problema deveras estudado na literatura de finan??as ?? o da assimetria de informa????o e a rela????o entre o agente e o principal. A Instru????o Normativa 480 publicada pela Comiss??o de Valores Mobiliarios que, entre outras normatiza????es, determinou a divulga????o de remunera????es fixa, vari??vel e baseada em a????es de membros de componentes da alta diretoria, comit??s estatut??rio, de auditoria, de risco, financeiro, de remunera????o, al??m do conselho de administra????o e fiscal, tornou poss??vel a evidencia????o emp??rica dos estudos sobre remunera????o executiva e desempenho de companhias presentes no mercado acion??rio brasileiro. A distin????o das pessoas do propriet??rio e do gestor de um neg??cio ?? uma tend??ncia natural da economia globalizada tendo em vista a possibilidade de se ter pessoas altamente capacitadas no comando de uma companhia, qualificadas para as fun????es que lhe s??o atribu??das. Assim surge o problema de ag??ncia e o problema desta pesquisa: existe rela????o entre remunera????o de executivos e o desempenho de companhias abertas brasileiras? Deste modo, o objetivo geral da pesquisa foi o de verificar se a remunera????o paga aos executivos de companhias abertas brasileiras ?? influenciada pelo desempenho destas empresas. Teve por objetivos espec??ficos tamb??m, apresentar a composi????o da remunera????o executiva no Brasil, verificar se a remunera????o vari??vel influencia no resultado das companhias brasileiras, identificar e descrever caracter??sticas das empresas tais quais tamanho e setor diferen??as entre a remunera????o m??dia por setor, estat??stica descritiva acerca da remunera????o no Brasil, investigar a rela????o existente entre a remunera????o de executivos e o desempenho das companhias abertas brasileiras e apresentar a literatura existente que aborde a rela????o entre remunera????o executiva e desempenho de companhias. Foram utilizadas dados em painel com a observa????o de efeitos fixos e efeitos aleat??rios. A pesquisa apresentou rela????o estatisticamente positiva e significativa entre a remunera????o executiva e desempenho de companhias abertas brasileiras. Concluiu que h?? aumento da remunera????o executiva quando h?? aumento do retorno para o acionista no exerc??cio, no exerc??cio imediatamente anterior e no segundo exerc??cio anterior

Thesis (MBA)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: Executive remuneration in South Africa has continued to attract public outrage and generate much debate among various stakeholders due to the perceived non-alignment of compensation packages awarded to senior executives and company performance. This research examines the relationship between executive compensation and financial performance of South African listed companies. Furthermore, the study investigates the link between executive pay and sustainability performance measures such as environmental, social and governance (ESG) criteria. Almost no research has been done in South Africa to examine the link and integration of ESG performance metrics into executive pay as researchers continue to focus on traditional financial measures of performance such as earnings (EBITDA), earnings per share (EPS), return on equity (ROE), return on assets (ROA), total shareholder return (TSR) and share price. The link between executive compensation and sustainability metrics (ESG) has become a topic of much discussion among academics and investors due to the potential influence of ESG factors on companies’ financial performance and sustainable long-term value creation. The research begins by examining the changes in the level of executive compensation during a five-year period and by testing the relationship between executive pay and traditional financial performance measures. The results show that the total compensation of CEOs has been steadily increasing during the five-year period while variable performance bonuses experienced a slight decline during the economic recession of 2007 to 2008. The results provided evidence that there is a statistically significant positive relationship between executive remuneration and company profitability. Findings for the second objective suggest that while executive compensation plans of many companies have been formally tied to ESG performance metrics, few companies in the study have disclosed effective and robust ESG performance measurement systems that tie executive pay to sustainability performance.

No description available.

Skills shortages in South Africa occur when demand for certain skills exceeds supply, South Africa has a high demand for mathematical, sciences and information technology (IT) related skills (Daniels, 2007:1). Factors such as HIV/AIDS, legislation (for example affirmative action), and rapid growth of the IT sector and the education system are contributing to the continuous increase in the skills shortages rate in South Africa (Daniels, 2007:1). As a result of the skills shortages, South African organisations find themselves competing with international organisations for managerial-level employees, resulting in a ‘war for talent’. This study specifically focussed on the incidence and reasons associated with managerial-level employees’ intentions to leave their KwaZulu-Natal (KZN)-based organisations. In particular, the perceptions of MBA students studying at UKZN formed the focus of this study. The study, both primary and secondary data were collected and analysed. In the study the targeted population were managerial-level employees who were currently working in KwaZulu-Natal-based organisations and who had met the entry requirements of UKZN’s Graduate School of Business (GSB). The purposive sampling technique was used and all the registered MBA students at the GSB of UKZN formed the target population that is, the target population comprised of all 1st year, 2nd year and 3rd year MBA students and there were approached following that same order. In the study it was found that the three CFST sub-components that had the most influence on the managerial-level employees’ decision to leave were aspects of the CFST related to careerpath strategies, management/leadership style and rewards. These results were more clearly supported and given stronger evidence by the rankings of the high scoring samples of the intention to leave (ITL) scale and propensity to leave (PTL) scale which depicted the same three CFST sub-components. Recommendations were made based on the findings of the study that South African organisations have a strong influence on the respondent’s decisions to leave their organisations. It was also recommended that South African organisations should implement effective leadership/management style and should also offer their managerial-level employees competitive remuneration packages. / Thesis (M.Comm.) - University of KwaZulu-Natal, Pietermaritzburg, 2009.

In the last decade South Africa saw the introduction of s 8C into the Income Tax Act, no.58 of 1962, the introduction of IFRS 2 into the International Financial Reporting Standards and the promulgation of the 2008 Companies Act. Each of these changes is relevant to and impact on the consequences flowing from executive share incentive schemes, from the perspective of both the employer company offering the scheme and the employee participating in the scheme. The aim of this study was to analyse, from the employer company’s perspective, the implications of each discipline in isolation, as well as the interrelationship of the three disciplines. The further aims of this study were to utilise the findings from the analyses to identify where legislative amendment is required to close loopholes or ensure equitable results, to identify where the interrelationship of the three disciplines result in unintended consequences, and to provide recommendations on how to avoid these adverse consequences. The most significant findings of this study are summarised below. Due to the legal precedent created by the Supreme Court of Appeal in the Labat case, the mode of settlement – cash or equity – will be the determining factor as regards the availability of an income tax deduction in the hands of the employer company. It is submitted that legislative amendment is required to rectify this inequitable result. Where payment by the employer pursuant to a share appreciation rights scheme occurs in a year of assessment subsequent to the year of assessment in which vesting occurred, changes in the value of the underlying equity instrument from the vesting date to the payment date could result in adverse income tax consequences to the employer and/or the fiscus. To address this, it is recommended that the Income Tax Act should be amended to expressly bring cash-settled executive share incentive schemes within the scope of s 7B and to align the provisions of s 7B and 8C in order to avoid anomalies existing between these two sections in so far as the income tax consequences in the hands of the participating employees are concerned.

published_or_final_version / Public Administration / Master / Master of Public Administration

The first essay analyzes mutual funds proxy voting records on shareholder proposals. The results indicate that mutual funds support shareholder proposals and vote against management for proposals that are likely to increase shareholders wealth and rights, in firms with weaker external monitoring mechanisms, in firms with entrenched management, and when funds have longer investment horizon. Mutual funds mostly take management sides on executive compensation related proposals, when they have higher ownership concentration, and when they belong to bigger fund families. The results further indicate that there is a positive reputational effect for the funds undertaking a monitoring role. Moreover, mutual funds reduce holdings when they disapprove of managements policy, but before doing so they take on an activist role by supporting shareholder proposals. The second essay investigates institutional investors trading behavior of acquiring firm stocks surrounding merger activities. We label investment companies and independent investment advisors as active institutions and banks, nonbank trusts and insurance companies as passive institutions. We find active institutions increase holdings of acquiring firm stocks for mergers with higher wealth implications. However, active institutions overreact to stock mergers at the announcement, which they appear to correct at the resolution quarter of the merger. The trading behavior of passive institutions suggests that these institutions disregard the market response of merger announcement in trading acquiring firm stocks at the announcement quarter. The passive institutions gradually update their beliefs and trade on the basis of merger wealth effect at the resolution quarter. The third essay examines relation between executive compensation structure with the existing level and changes of takeover defense mechanisms of firms. According to managerial entrenchment hypothesis, higher managerial power from adoption of takeover defense mechanisms would lead to generating higher rents for executives. Efficient contracting hypothesis argue that higher anti-takeover provisions would contribute in achieving efficient contracting by deferring compensation into the future due to the low possibility of hostile takeover. The results support managerial entrenchment hypothesis with regard to existing level of takeover defense mechanisms. With regard to changes in anti-takeover provisions, the existing level of managerial power influence the future pay structure.

Thesis (MPhil)--University of Stellenbosch, 2003. / ENGLISH ABSTRACT: The historical development of the role of directors in public listed companies contains inherent tensions by reference to the fiduciary responsibility of directors and the method in which directors are remunerated. The nature of incentive based remuneration is such that it will compel directors, in certain circumstances, to weigh their interests against those towards whom they owe a duty of care and a moral responsibility to act with prudence and temperance. The modem day corporate environment is complex and calls for directors with strong ethical views. This assignment endeavours to identify some of the complexities that contribute towards directors finding it difficult to stay on the ethical "straight and narrow" and attempts to weigh the effect of those factors against the effect of incentive remuneration, both as detractors from ethical behaviour. Both the shareholder supremacy business model and the stakeholder approach are analysed to identify those factors present in each that may add to the ethical complexity that directors have to deal with. The advent of the stakeholder approach in particular, adds an enormous amount of complexity. The case studies deal with two South African financial services companies that have both ceased trading as a consequence of unethical behaviour. The incentive remuneration models of both companies have been found to have played a major contributing role in the decision making processes in the companies, and have contributed to the demise of these organisations. Lessons are taken from the case studies and applied against the backdrop of the various principles of ethical behaviour namely rights, utility, justice and the ethics of responsibility. The finding of this study is that there is a role for incentive remuneration of directors, provided that the ethical pitfalls that this causes are recognised and steps taken to address them. Some of these steps are identified. / AFRIKAANSE OPSOMMING: Die historiese ontwikkeling van die direkteursrol, en spesifiek van openbare genoteerde maatskappye bevat inherente teenstrydighede met verwysmg na direkteursvergoeding en die vertrouensverpligtinge wat op direkteure rus. Die aard van direkteursvergoeding met 'n aansporingskomponent is so dat dit 'n direkteur van tyd tot tyd in 'n posisie plaas waar hy tussen sy eie belange en die van die ander belanghebbendes in 'n maatskappy, aan wie hy dit verskuldig is om met verdrag en versigtig op te tree, moet kies. Die hedendaagse maatskappyomgewing is kompleks van aard, en vereis direkteure met sterk etiese oortuigings. Hierdie werkstuk poog om sommige van die komplekse faktore wat afbreuk doen aan 'n direkteur se vermoe om ten alle tye streng eties op te tree, te identifiseer en op te weeg teen die effek wat direkteursvergoeding speel - beide as items wat afbreuk doen aan etiese optrede. Hier word ondersoek ingestel na beide die sogenaamde "aandeelhouersmodel" asook die" belanghebbende" model waarvolgens besigheid bedryf word. Die ontsluimering van die belanghebbende model veroorsaak spesifiek 'n aansienlike hoeveelheid etiese kompleksiteit. Die gevallestudies behandel twee Suid Afrikaanse fmansiele instellings wat hul bedrywighede gestaak het as gevolg van onetiese optrede deur direkteure. Die aansporingskomponent van die vergoedingsrnodelle in daardie maatskappye blyk 'n groot bydraende faktor te wees in die onetiese besluitneming wat plaasgevind het, en wat uiteindelik tot die ondergang van die ondernemings gelei het. Laastens, word die lesse wat geleer is uit die gevallestudies, toegepas in gewysigde format, en getoets aan die hand van die verskillende beginsels wat etiese besluitneming onderhou, naamlik die beginsels van regte, regverdigheid, utiliteit en die beginsel van etiese verantwoordelikheid. Daar word tot die slotsom gekom dat daar wel ruimte vir aansporingskemas vir direkteure is, maar dat dit slegs eties regverdigbaar sal wees mits ag geslaan word op die lesse wat uit die gevallestudie voortspruit, tesame met die impementering van sekere korrektiewe maatstawwe.