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CEO compensation sensitivity to performance in the South African mining industryTheku, Makoanyane January 2014 (has links)
Orientation: The level of CEO compensation and its relationship with organisational
performance has generated considerable interest worldwide. In light of compromised
mining productivity as a result of the recent labour unrest in South African, some
commentators have questioned the justification of certain CEO compensation in the
country’s mining industry.
Research purpose: The primary purpose of this study was to describe the relationship
between CEO compensation and organisation performance in the South African mining
industry.
Motivation for the study: A deeper understanding of the relationship would enhance
knowledge when developing optimal CEO reward systems to ensure sustainability of the
mining industry within the South African context.
Research design, approach and method: The research was a quantitative, archival
study involving 30 mining companies over a five year period. The statistical analysis
techniques used in the study included analysis of normality variance and multivariate
regression.
Main findings/results: The main finding of the research was that there was a moderate
to strong relationship between CEO compensation and organisational performance in the
South African mining industry. However, operating expenses have progressively
increased, putting performance under pressure. Furthermore, it was also found that
company size plays an influential role in CEO compensation levels.
Practical/managerial implications: While the CEO compensation appears to be
generally aligned with the organisational performance, the findings suggest that boards
of directors should focus on structuring reward systems more optimally to mitigate
managerial rent seeking in large companies and unsustainability in smaller companies.
Contribution/value-add: This study has contributed to the body of existing knowledge
on executive pay for performance in the context of the South African mining industry. In
addition, the study has demonstrated that the other non-performance related measures
need to be considered in executive compensation design. / Dissertation (MBA)--University of Pretoria, 2014. / lmgibs2015 / Gordon Institute of Business Science (GIBS) / MBA / Unrestricted
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