CEO remuneration and company performance in South African mining

Abstract

This study examines the relationship between Chief Executive Officer (CEO) remuneration and company performance in Johannesburg Stock Exchange (JSE)-listed South African mining companies from 2018 to 2024. The research addresses the persistent debate on whether executive compensation aligns with firm performance or reflects structural and governance-driven determinants. Guided by agency, optimal contracting, and managerial power theories, the study tests four hypotheses concerning the influence of accounting-based, market-based, and firm-specific factors on CEO pay, as well as the moderating role of firm size. Panel data comprising 69 firm-year observations were analysed using fixed-effects panel regressions with panel-corrected standard errors (PCSE) to control for heteroskedasticity and cross-sectional dependence. The results show that accounting-based profitability, particularly Net Profit Margin, significantly predicts short-term CEO remuneration, while market-based measures such as Total Shareholder Return (TSR) exhibit no significant association. Firm size negatively moderates the pay-performance relationship, indicating weaker sensitivity in larger firms. Overall, the findings reveal partial and asymmetric alignment between CEO pay and performance, with evidence of structural pay rigidity and managerial influence. The study contributes to South African corporate-governance research by demonstrating that formal compliance with King IV principles has improved transparency but not substantive pay-for-performance alignment within the mining sector.