Research thesis submitted in partial fulfilment (50%) of the Degree of Master of Commerce University of the Witwatersrand, Johannesburg, Faculty of Commerce, Law and Management – School of Accountancy 2015 / Executive remuneration has been under intense scrutiny by both investors and the media over the past 10 to 20 years because of the increasing magnitude of these remuneration packages (Otten, 2007; Sapp, 2007). This research report explores the relationship between executive director remuneration and the performance of publically listed companies (JSE) in South Africa, as well as ascertaining whether any relationship exists between director profiles and director remuneration. The study population comprised all South African companies listed on the JSE during 2014. The final sample consisted of 49 companies after the transformation of the data. A total of 708 director profiles were examined. The results of the study appeared to indicate a lack of correlation between executive director remuneration and company performance in publically listed South African companies. On the other hand, the results of the regression provided empirical support for the existence of a significant positive relationship between director remuneration and total assets. The results also illustrated that, in general, directors who are male over the age of 50 and who have served as directors for periods of between six to 10 years receive higher total remuneration compared to other classes of directors. It was also noted that race appeared not to play a role in director remuneration. Key words: Executive director remuneration, executive director profiles, company performance, ROA, Tobin’s Q / MT2017

A research report submitted to the Faculty of Management, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Management. 1994 / Organisations in South Africa are. paying out millions of Rands in financial incentives to executives without ,knowing conclusively whether or not company performance actually improves as a result of financial incentive schemes. Unions, tne media, workers, politicians and others are paying increasing attention to the levels of compensation that executives receive. The question being asked is whether these levels ate really necessary. This, the first research of its mud in South Africa, surveys the views of 121 top managers, from 17 organisations using incentive schemes, on the, impact of these schemes. There is convincing evidence that they are perceived to increase motivation and company performance, build teamwork and are effective in aligning the interests of managers and shareholders. The schemes are valuable in attracting, retaining and motivating executives" Given the complexity of setting executive remuneration, it is submitted. that there be no interference in the level of incentive scheme payouts. The factor analysis yielded a four factor solution, which was interpreted in terms of the literature review and constructs in the questionnaire. The first factor revealed that incentives are a motivator and increase company performance. The) build teamwork and are effective in aligning the interests of managers and shareholders. The second factor state; that incentives should be underpinned by openness and transparency. A fundamental principle behind this is that the relevant financial position should be known by all participants. It was also stated that the whole organisation i.e, all IfNels , should be on an incentive scheme, The third factor highlighted risk aversion in these executives and that basic salary is most important. The fourth factor, locus of control, stressed the importance of the scheme to the individual personally in terms of motivation, focus, reward, retention of services and the ability to control the incentive scheme payout. 111e surprising finding was the extent to which SA executives were risk averse and just how important the basic salary is. Guidelines, based on the factor analysis, content analysis and oo:rrespohd~nce analysis conducted on the questionnaires, ate offered to the designers incentive· schemes. Without correctly designed and aggressive incentive schemes the owners oforgamsations could expect very m.ediocre, "9 to S" type of commitment from their top·management team. Incentive schemes playa vital role in the design of com.petitive remuneration systems. Their importance should not be underestimated. / MT2017

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.

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.

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.

Orientation: Over the years, the increase in executive remuneration in both the private sector and state-owned entities (SOEs) has been the subject of intense discussions. The poor performance of some SOEs with highly remunerated executives begs the question whether chief executive officers (CEOs) in South African SOEs deserve the high levels of remuneration they receive. Research purpose: The main purpose of the study was to determine whether there is a relationship between CEOs’ remuneration and company performance in South Africa’s Schedule 2 SOEs. Motivation for the study: A greater understanding of the relationship between CEO remuneration and organisational performance would expand knowledge when developing optimal CEO remuneration systems to ensure sustainability of SOEs in the South African context. If a relationship exists, it could justify the high remuneration received by CEOs. Research design, approach, and method: This quantitative, longitudinal study, conducted over a nine-year period, collected secondary data from the annual reports of 18 Schedule 2 SOEs. The primary statistical techniques used in the study included were OLS multiple regression analysis and correlational analysis on a pooled dataset. Main findings/results: The primary finding was that there is a relationship between CEO remuneration and company performance (mainly an inverse relationship), with no consistent trend between the constructs. Turnover appears to be an important component, as it was the most stable measure of company performance during the study period. The results indicate that the CEOs’ remuneration continued to increase, even when the SOEs were performing poorly. Practical managerial implications: Since the study focused on the relationship between CEOs’ remuneration and company performance, it may aid policymakers in forming new rules and regulations that would help improve the country’s economic performance while attracting international investors. Contribution/value-add: The study provides new knowledge to the limited research available on SOEs in South Africa. Further, this research focused on three different components of CEOs’ remuneration, thereby shedding more light on the relationship between their remuneration and company performance. / Business Management / PhD (Management Studies)