Remuneration Committees in South African Listed Companies

Abstract

This article examines the administration of executive compensation in listed South African companies in order to understand the background to the emotive expressions by the public concerning the amount of executive earnings. It conducts research in order to ascertain whether a Remuneration Committee (RC) is effective. It begins by looking at the history of limited information disclosure which existed before the 1990s and describes cases where companies suffered losses due to the Agency Theory (AT) when executives dominated boards. This was followed by the subsequent introduction and application of Corporate Governance and controls to a RC. The discussion is based on the available literature and the findings from interviews and an electronic survey that was dispatched to a large selection of listed companies. A variety of views indicate fresh thoughts on the topicality of the relatively new concepts surrounding RCs which enquiries and interviews have shown are not well understood. Thus the study fills the gap in knowledge on RCs.

Key Words:

• Agency Theory (AT)
• Board
• The Cadbury Report on Corporate Governance
• Chief Executive Officer (CEO)
• Directors
• Corporate Governance
• The JSE Securities Exchange (JSE)
• King Report-The King Committee on Corporate Governance
• Non Executive Director (NED)
• Remuneration Committee (RC)
• Shareholders
• Stewardship Theory
• supra