Determinants of executive compensation in South African state-owned enterprises

Maloa, Frans; Bussin, Mark

doi:10.25159/2520-3223/5857

Cited by 10 publications

(12 citation statements)

References 23 publications

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“…Whilst Agarwal (1981) argued that size is an important determinant of executive compensation because it represents a proxy for organisational complexity. In the same way, organisation size and type of industry, although investigated separately, were also found to be significant determinants of executive compensation within the context of South African SOEs (Maloa & Bussin, 2016).…”

Section: Organisation Size and Type Of Industry As Determinants Of Executive Remunerationmentioning

confidence: 69%

The relationship between the determinants of executive remuneration in South African state-owned enterprises

Maloa

2020

SA j. hum. resour. manag.

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Orientation: Research on executive remuneration should be able to indicate the necessary elements and dimensions at work when deciding on an executive’s package.Research purpose: The purpose of this article was to review a correlation of elements as determinants of executive remuneration.Motivation for the study: The limited research on executive remuneration tends to focus on how executive pay varies with performance and less on the determinants of executive remuneration.Research design and method: A quantitative research method was used. The target population consisted of executives from 21 South African state-owned enterprises (SOEs). The research design was a cross-sectional study. A categorical multiple regression analysis was performed.Main findings: The research results seem to suggest that there is a significant statistical correlation between organisation size and type of industry; job function and type of industry; organisation size and job function; and the level of education and job function as a determinant of executive remuneration within the context of South African SOEs. However, the extent of the correlations between the determinants of executive remuneration is not the same.Practical/managerial implications: The research results create awareness amongst human resources practitioners and consultants of the extent to which some of the determinants of remuneration may apply in practice.Contribution/value-add: This study highlights the importance of probing further with the effect of size correlation in quantitative research in the context of executive remuneration.

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Section: Organisation Size and Type Of Industry As Determinants Of Executive Remunerationmentioning

confidence: 69%

The relationship between the determinants of executive remuneration in South African state-owned enterprises

Maloa

2020

SA j. hum. resour. manag.

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“…Dai (2014) found that the industry has a significant influence on executive compensation within Chinese listed firms. Maloa and Bussin (2016) supported this viewpoint and found that in the context of South African SOEs, the type of industry contributes significantly and positively to executive compensation.…”

Section: The Link Between Chief Executive Officer Compensation and Company Sizementioning

confidence: 75%

“…There is a general consensus that executive compensation has become excessive, given that (1) executive pay is inequitable relative to other employees' pay and (2) the amounts are unjustified, compared to the SOEs' performance (Nichols & Subramaniam, 2001). Maloa and Bussin (2016) postulate that research should be able to indicate how executive compensation is arrived at, and show all the necessary elements and dimensions at work when determining executive compensation.…”

Section: Introductionmentioning

confidence: 99%

The relationship between chief executive officer compensation and the size and industry of South African state-owned enterprises

Coetzee

Bezuidenhout

2019

SA j. hum. resour. manag.

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Orientation: Concerns about exorbitant executive compensation are making headlines, because executives receive lucrative packages despite state-owned enterprises (SOEs) performing poorly. It appears as if chief executive officers (CEOs) are not being held accountable for the performance of the SOEs.Research purpose: The purpose of the study was to determine whether the size and the industry of an SOE had an impact on CEO compensation packages.Motivation for the study: A greater understanding of the relationship between CEO remuneration and the size and type of industry of SOEs would assist with the standardisation of CEO remuneration and linking CEO pay to SOE performance.Research approach/design and method: A multiple regression analysis on a pooled dataset of 162 panel observations was conducted over a 9-year period. Financial data of 18 SOEs were extracted from the McGregor BFA database and the annual reports of SOEs.Main findings: The findings show that the size of an SOE does not influence the total compensation of CEOs. However, larger SOEs pay larger bonuses due to these SOEs being in a stronger financial position to offer lucrative bonuses. CEO’s remuneration was aligned within certain industries.Practical/managerial implications: The findings emphasise the need to link CEO compensation with SOE performance. Standardisation in setting CEO compensation and implementing performance contracts should be considered.Contribution/value-add: The study confirms that CEO pay is not linked to performance and not justified when considering SOE size or industry.

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“…A general observation from previous studies show that different performance measures are used, with most being accounting and traditional performance measures, such as return on assets, return on equity (ROE) or revenue (Maloa & Bussin, 2016). Nearly all the studies of SOEs used financial figures as a proxy for company performance to examine relationships between company performance and CEOs' remuneration, for example, Bezuidenhout et al (2018), and Mbo and Adjasi (2014).…”

Section: State-owned Enterprises Versus Private Companiesmentioning

confidence: 99%

“…Whilst the poor performance of South African SOEs is widely publicised, many do not follow the remuneration guidelines issued by the Department of Public Enterprises (DPEs) that require remuneration to be benchmarked with the private sector (Maloa & Bussin, 2016). This has led salary inequalities within SOEs, with the pay gap between executives and the average employee being just as big as within private companies.…”

Section: Chief Executive Officers' Remuneration Amongstmentioning

confidence: 99%

The effect of the economic crisis on pay-performance link in South African state-owned enterprises

Bezuidenhout

2021

South African Journal of Business Management

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Purpose: The dissatisfaction with executive remuneration worldwide has increased because it is generally believed to have been instrumental to the 2008 Global Economic crisis. Central to this is the apparent unsatisfactory relationship between business performance and chief executive officer (CEO) remuneration. The primary aim of this study was to compare the pay-for-performance association between CEOs’ remuneration and state-owned entity performance before, during and after the economic crisis. It did so by assessing the chief executive remuneration link with state-owned enterprise performance from the period 2006 to 2014.Design/methodology/approach: Twenty-one schedule 2 state-owned enterprises in South Africa. This quantitative, longitudinal study, obtained secondary data from the annual reports of state-owned enterprises from the period 2006 to 2014. Ordinary least square multiple regression analysis was used as the principal statistical method.Findings/results: The findings indicate that the link between chief executive remuneration and state-owned entity performance demonstrated different patterns in the pre- and post-crisis periods.Practical implications: State-owned entity remuneration committees should place more emphasis on the financial efficiency measurements to enhance efficiencies in South African state-owned enterprises. Shareholders and regulators should take cognisance of measures to be used to assess the potential performance of state-owned entities, through executive remuneration, especially during an economic crisis. Findings could furthermore be of importance to other academics investigating this phenomenon.Originality/value: This research provides additional knowledge to the limited research available on SOEs in South Africa. Further, it reveals that an economic downturn affects the link between CEOs’ remuneration and SOE performance. This addresses a knowledge gap concerning the pay-for-performance link in South African SOEs and in emerging economies in general.

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Determinants of executive compensation in South African state-owned enterprises

Cited by 10 publications

References 23 publications

The relationship between the determinants of executive remuneration in South African state-owned enterprises

The relationship between the determinants of executive remuneration in South African state-owned enterprises

The relationship between chief executive officer compensation and the size and industry of South African state-owned enterprises

The effect of the economic crisis on pay-performance link in South African state-owned enterprises

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