Chief executive officer and chief financial officer compensation relationship to company performance in state-owned entities

Show simple item record Bussin, Mark H.R. Ncube, Marvin 2018-02-15T07:44:44Z 2018-02-15T07:44:44Z 2017-10-30
dc.description The study was conducted by M.N. (GIBS) as part of his Masters in Business Administration research project in 2015. M.H.R.B. (University of Johannesburg) was M.N.’s supervisor and edited this article for publication. en_ZA
dc.description.abstract BACKGROUND : Optimal contracting continues to dominate boardroom and dinner discussions worldwide in light of the 2008 global financial crisis and especially in South Africa, due to the growing income gap. Increased scrutiny is being placed on South African state-owned entities (SOEs), as a result of the seemingly poor performance of SOEs. Some of the SOEs are reported to have received financial bailouts from taxpayers’ money, while executives are raking in millions of rands in remuneration, provoking some concerns on the alignment of executive pay to company performance in SOEs. AIM : The study will assist remuneration committees and policymakers in the structuring of executive pay in SOEs to ensure alignment to company performance. SETTING : The study sought to assess, based on empirical evidence, if there is a positive relationship between Chief Executive Officer (CEO) and Chief Financial Officer (CFO) remuneration and company performance in South African SOEs in the period between 2010 and 2014. All 21 Schedule 2 SOEs were included in the study. METHODS : The research was a quantitative archival research methodology. Correlation and multiple regression analysis were the main statistical techniques used in this study. RESULTS : Contrary to popular media, a positive relationship between CEO and CFO remuneration (fixed pay and short-term incentives) and company performance in SOEs was observed. Company size appears to be the key determiner of fixed pay in SOEs. The positive relationship was mainly noted on absolute profitability measurements like EBITDA (earnings before interest and tax and depreciation and amortisation) and net profit. CONCLUSION : SOE remuneration committees and policymakers should maintain the positive relationship; however, more emphasis should be placed on financial efficiency measurements so as to enhance efficiencies in SOEs. en_ZA
dc.description.department Gordon Institute of Business Science (GIBS) en_ZA
dc.description.librarian am2018 en_ZA
dc.description.uri en_ZA
dc.identifier.citation Bussin, M.H.R. & Ncube, M., 2017, ‘Chief Executive Officer and Chief Financial Officer compensation relationship to company performance in state-owned entities’, South African Journal of Economic and Management Sciences 20(1), a1644. https://DOI. org/ 10.4102/sajems.v20i1.1644. en_ZA
dc.identifier.issn 1015-1812 (print)
dc.identifier.issn 2222-3436 (online)
dc.identifier.other 10.4102/sajems.v20i1.1644
dc.language.iso en en_ZA
dc.publisher University of Pretoria, Department of Economics en_ZA
dc.rights © 2017. The Authors. Licensee: AOSIS. This work is licensed under the Creative Commons Attribution License. en_ZA
dc.subject Financial crisis en_ZA
dc.subject Taxpayers’ money en_ZA
dc.subject South Africa (SA) en_ZA
dc.subject South African state-owned entities (SOEs) en_ZA
dc.subject Chief executive officer (CEO) en_ZA
dc.subject Chief financial officer (CFO) en_ZA
dc.title Chief executive officer and chief financial officer compensation relationship to company performance in state-owned entities en_ZA
dc.type Article en_ZA

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