Thesis (MBA)--Stellenbosch University, 2007. / ENGLISH ABSTRACT: This is an introductory research into executive remuneration and its effectiveness
as an instrument to generate company growth in South Africa. This research is
based on the assumption that there is a direct relationship between company
performance and growth, and directors' remuneration.
Companies employ directors in an attempt to increase value to shareholders.
Remuneration paid to directors is sometimes viewed as excessive. To determine
whether executive remuneration is excessive, various elements have to be taken
into account. These elements vary, depending on the point of view of the analyst.
This research is based on the point of view of the shareholder. A remuneration
strategy can be deemed effective when elements important to shareholders have
shown a positive change relevant to the change in directors' remuneration.
Thirty-eight companies have been sampled. The proxies of the ROA ratio as well
as the share price growth have been used. It is apparent that of the companies
sampled, the majority has an effective executive remuneration strategy in terms
of driving company growth and performance.
In 18 instances a change in directors' remuneration (seen in isolation) resulted in
an outright benefit to the company. This change was an increase in directors'
remuneration in 15 of the companies sampled. In three of the companies
sampled, this change was a decrease in directors' remuneration. Interpreting the
results of the sample data, within the ambit of the proxies used, the conclusion is
that in these instances the executive remuneration strategy has been used as an
effective instrument to generate company growth.
In eight instances a change in directors' remuneration (seen in isolation) did not
result in any benefit to the company. Six of these changes were an increase in
directors' remuneration. Two of these changes were a decrease in directors'
remuneration. Interpreting the results of the sample data, within the ambit of the
proxies used, the conclusion is that in these instances the executive
remuneration strategy had not been used as an effective instrument to generate
company growth.
In 12 instances a change in directors' remuneration (seen in isolation) resulted in
some kind of benefit to the company. Ten of these changes were an increase in
directors' remuneration . Two of these changes were a decrease in directors'
remuneration . Interpreting the results of the sample data, within the ambit of the
proxies used, the conclusion is that in these instances the executive
remuneration strategy had been used as a partially effective instrument to
generate company growth.
The proxies of the ROA ratio as well as the growth in a company's share price
can therefore be used to determine the effectiveness of a company's executive
remuneration strategy in driving company growth and performance. These
proxies can be used if the assumption is made that there is a relationship
between company growth and performance and executive remuneration.
Executive remuneration alone does not drive company growth. There are
numerous other factors at playas well. Executive remuneration should, however,
be closely scrutinised so that it is optimally used. Executive remuneration should
be incentivised in such a way that increased remuneration results in an increase
in the ROA ratio as well as in market related growth in the share price over a
period of time. / AFRIKAANSE OPSOMMING: Hierdie is inleidende navorsing in uitvoerende bestuur se vergoeding en hul
doeltreffendheid as 'n instrument om groei te bewerkstellig vir maatskappye in
Suid-Afrika. Hierdie navorsing is gebaseer op die aanname dat daar 'n direkte
verwantskap is tussen opbrengste en groei van maatskappye en die
direkteursvergoeding.
Maatskappye betrek direkteure om waarde vir beleggers te vermeerder.
Direkteursvergoeding word soms beskou as oordadig. Om te bepaal of hierdie
besoldiging oordadig is, moet verskeie aspekte in berekening gebring word.
Hierdie aspekte verskil vanuit die oogpunt van analis tot analis. Hierdie navorsing
is gebaseer vanuit die oogpunt van die aandeelhouer. 'n Besoldigingstrategie
kan as suksesvol beskou word as die aspekte wat belangrik is vir die
aandeelhouer positief verander het, teenoor die verandering in die
direkteursvergoeding.
Die resultate van 38 maatskappye is gebruik. Die opbrengs op bates verhouding
en die groei in aandeleprys is as maalstaf gebruik. Oil blyk dal die meerderheid
van maatskappye waarvan inligting gebruik is, wei 'n effektiewe uitvoerende
besoldigingstrategie het in terme van maatskappygroei en opbrengste vir
aandeelhouers.
In 18 gevalle was die verandering in direkteursbesoldiging (in isolasie beskou) 'n
direkte voordeel vir die maatskappy. Hierdie verandering was 'n vermeerdering
van besoldiging in 15 gevalle. In drie gevalle was die verandering in besoldiging
'n vermindering . Interpretasie van die navorsing, met verwysing na die
maatstawwe wat gebruik is, dui daarop dat (in hierdie gevalle) die uitvoerende
besoldigingsstrategie as 'n effektiewe instrument gebruik is om maatskappygroei
teweeg te bring. In agt gevalle was die resultaat van 'n verandering in direkteursbesoldiging (in
isolasie beskou) nie tot voordeel van die maatskappy nie. In ses gevalle was die
verandering in direkteursbesoldiging 'n vermeerdering. Twee van die
veranderinge in direkteursbesoldiging was 'n vermindering. Interpretasie van die
navorsing, met verwysing na die maatstawwe wat gebruik is, dui daarop dat (in
hierdie gevalle) die uitvoerende besoldigingstrategie onsuksesvol as 'n
effektiewe instrument gebruik is om maatskappygroei teweeg te bring.
In 12 gevalle was die resultaat van 'n verandering in direkteursbesoldiging (in
isolasie beskou) tot die een of ander voordeel van die maatskappy. In 10 gevalle
was die verandering in direkteursbesoldiging 'n vermeerdering. In twee gevalle
was die verandering in direkteursbesoldiging 'n vermindering. Interpretasie van
die navorsing, met verwysing na die maatstawwe wat gebruik is, dui daarop dat
(in hierdie gevalle) die uitvoerende besoldigingstrategie gedeeltelik suksesvol as
'n effektiewe instrument gebruik is om maatskappygroei teweeg te bring.
Die maatstawwe van die opbrengste op bates verhouding en die van groei in
aandeleprys kan dus aangewend word om die doeltreffendheid te bepaal van die
uitvoerende besoldigingstrategie om maatskappygroei en opbrengste teweeg te
bring. Hierdie maatstawwe kan gebruik word indien die aanname gemaak word
dat daar 'n verwantskap is tussen maatskappygroei en opbrengste sowel as die
uitvoerende besoldiging wat betaal word.
Die uitvoerende besoldiging is nie die enigste faktor verantwoordelik vir
maatskappygroei nie. Daar moet noukeurig gelet word op uitvoerende
besoldiging sodat dit optimaal aangewend word. Uitvoerende besoldiging moet
tot aansporing dien sodat meer besoldiging aanleiding gee tot 'n vermeerdering
van die opbrengste op bates verhouding sowel as markverwante groei in
aandeleprys oor 'n periode van tyd.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/21112 |
| Date | 12 1900 |
| Creators | Van Der Linde, Gideon Charl |
| Contributors | Hamman, W. D., Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | Unknown |
| Type | Thesis |
| Rights | Stellenbosch University |
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