Executive compensation and gaps in South Africa's regulatory framework : a structured literature review and future agenda

Abstract

South Africa is a country with huge income gaps. Further, currently, there is trust deficit that is pervasive in many sectors of the economy which has been fueled by recent corporate scandals. As such, the study sought to determine whether the regulatory and disclosure framework currently in place is geared to address these challenges. A systematic literature review focusing on cross-country comparative study found several areas in which South Africa’s regulatory and disclosure requirements, particularly as it relates to the executive compensation could be enhanced. As such, the study suggests that practices deployed in countries that have faced trust deficit and are addressing these through enhanced practices could be adopted to enhance South Africa’s position. There are merits for policy makers to consider principles and practices such as mandatory pay-ratio disclosure, claw-back provision, binding shareholders’ say on pay, codetermination, inclusivity and mandating the supreme audit institution to conduct monitoring and evaluation as part of regulatory and disclosure regime. The deficiencies of the current regulatory and disclosure requirements open the system up to be exploited by greed.