Thesis (MComm)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: For the past few decades the remuneration of directors has been in the spotlight,
especially in view of the corporate scandals that occurred around the turn of the 20th
century. Generally, managers need to manage firms in such a way that shareholders’
value is maximised. Unfortunately, shareholders of firms and the general public have
the perception that directors are over-compensated, and that there is no relationship
between the remuneration of directors and the financial performance of the firms to
enhance shareholders’ value. A lack of transparency, inadequate disclosure by firms
and remuneration committees’ conflict of interest are reasons cited for these
perceptions. Although South Africa is ranked as a global leader in terms of its corporate
governance practices, many firms still do not adhere to the King reports’ principles. This research study investigated whether a relationship exists between the
remuneration of directors and the financial performance of firms. The firms selected for
the study included both listed and delisted firms from the Industrial Sector of the
Johannesburg Stock Exchange (JSE) for the time period 2002 until 2010. Ninety-three
firms complied with the requirements to be included in the study. All these firms had
effective remuneration strategies in place to promote financial performance and growth
of the firms. Secondary data were collected for the nine consecutive years of the study
period, representing a period prior to substantial changes in accounting and disclosure
regulation that influenced the comparability of financial reporting of the firms. It is important to note that directors’ remuneration is not the only motivating factor for
firm performance, but one of many. Directors’ remuneration and incentives should be
optimally utilised to increase performance and growth in the firms, and it should not
merely be a case of directors being overcompensated for services rendered.
In order to operationalize directors’ remuneration, it was converted and subcategorised
into four variables. These dependent variables for directors’ remuneration
consisted of basic salary, bonuses (performance), gains on share purchases or share
options and what was termed as “other” remuneration. “Other” remuneration included
pension, medical, motor, and telephone allowances. To measure the financial
performance of the firms, the following market and accounting measures were
employed: turnover, earnings per share (EPS), total share return (TSR) and market
value added (MVA). Analysing these variables’ data by means of selected descriptive statistical measures and inferential regression analysis, it appeared that the data were
significantly skewed, but that financial performance of the firms was a strong
determinant of the change in directors’ remuneration.
Additional regression analyses were performed to investigate whether a lagged
relationship existed between the dependent variable, namely directors’ remuneration,
and the independent variables, as reflected by the various financial performance
measures. Results from these regression analyses strengthened the findings of the
study to show that a relationship existed between directors’ remuneration and the
financial performance of the firms investigated. / AFRIKAANSE OPSOMMING: Direkteursvergoeding trek vir die afgelope paar dekades gereeld aandag, veral weens
die korporatiewe skandale wat aan die lig gekom het rondom ongeveer die
eeuwisseling. Normaalweg stel firmas direkteure aan om aandeelhouerswelvaart te
verhoog. Daar bestaan ongelukkig ʼn opvatting onder talle aandeelhouers asook die
algemene publiek dat direkteure oorbetaal word, en dat daar geen verwantskap
bestaan tussen direkteursvergoeding en die finansiële prestasie van firmas om
aandeelhouerswelvaart te verhoog nie. Redes wat aangevoer word vir hierdie sienings
sluit in die tekort aan deursigtigheid, onvoldoende openbaarmaking deur firmas en
vergoedingskomitees se botsende belange. Alhoewel Suid-Afrika geklassifiseer word
as ’n wêreldleier op die gebied van korporatiewe bestuur, is daar steeds firmas wat nie
voldoen aan die beginsels van die King-verslae nie. Hierdie navorsingstudie ondersoek die moontlike verwantskap tussen
direkteursvergoeding en die finansiële prestasie van firmas. Die geselekteerde firmas
vir die studie was genoteerde en voorheen-genoteerde firmas in die nywerheidsektor
op die Johannesburgse Aandelebeurs (JSE), vir die periode 2002 tot en met 2010.
Drie-en-negentig firmas het voldoen aan die vereistes om ingesluit te word in die
steekproef van die studie. Al die geselekteerde firmas het doeltreffende
vergoedingstrategieë in plek gehad om finansiële prestasie en groei in die firmas aan
te spoor. Sekondêre data is vir die nege agtereenvolgende jare van die studie
ingesamel. Veranderinge in regulasies voor en na die studieperiode het dit moeilik
gemaak om periodes buite hierdie tydgleuf vir vergelykingsdoeleindes in te sluit.
Dit is belangrik om daarop te let dat direkteursvergoeding nie die enigste faktor is wat
ʼn firma se finansiële prestasie kan beïnvloed nie, maar slegs een van vele. In die lig
hiervan, moet direkteursvergoeding en ander aansporingsmaatstawwe optimaal
gebruik word om finansiële prestasie in firmas aan te moedig. Om ʼn duideliker skets rakende direkteursvergoeding te verkry, is vergoeding
onderverdeel in vier sub-kategorieë veranderlikes. Die afhanklike veranderlikes van
direkteursvergoeding is soos volg geklassifiseer: basiese salaris, bonusse (prestasie),
opbrengste uit aandeelaankope en aandeleopsies en ʼn laaste kategorie wat as “ander”
vergoeding geklassifiseer is. Hierdie “ander” vergoedingskomponent het grootliks
bestaan uit pensioen- en mediese bydraes asook motor-, en telefoonvoordele. Ten einde die onafhanklike veranderlike, naamlik die finansiële prestasie van firmas,
te meet, is die volgende mark- en rekeningkundige maatstawwe gebruik: omset,
verdienste per aandeel (VPA), markwaarde toevoeging (MWT) en aandeelopbrengs.
Met die ontleding van al die veranderlikes het beskrywende statistiek en inferensiële
regressietoetse aangedui dat die data ʼn merkbare skewe verspreiding het, maar dat
finansiële prestasie in die firmas ʼn beduidende faktor was wanneer
direkteursvergoeding aangepas is.
Bykomende regressietoetse is gedoen om te ondersoek of daar vertragingstydperke
was tussen die afhanklike veranderlike, naamlik direkteursvergoeding, en die
onafhanklike veranderlike, finansiële prestasie van firmas. Hierdie toetse het die studie
se bevindinge bevestig dat daar inderdaad ʼn verwantskap bestaan tussen
direkteursvergoeding en die finansiële prestasie van firmas.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/97769 |
| Date | 12 1900 |
| Creators | Crafford, Wessel Lourens |
| Contributors | Erasmus, Pierre, Stellenbosch University. Faculty of Economic and Management. Dept. of Business Management. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | xiv, 224 pages |
| Rights | Stellenbosch University |
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