A multi-stakeholder view on director remuneration guidance in South Africa

Abstract

Purpose: Given South Africa’s well-developed governance framework, considerable wage inequality and sizeable executive packages, this study was conducted to reflect on the aptness and application of the King IV director remuneration guidelines.

Design: The views of 23 representatives of institutional investors, remuneration committee members and leading executives of financial services companies were gauged on the King IV remuneration recommendations by conducting semi-structured interviews. The primary data were analysed by conducting thematic analysis.

Findings: The participants commended the heightened focus on pay-related transparency and reporting quality evident in King IV, in particular the three-part remuneration report and single pay figure disclosure. Participants urged remuneration committees to link executive pay to the six capitals.

Practical implications: Government and the Institute of Directors in South Africa should account for the considerable regulatory burden that companies are experiencing when amending remuneration-related regulation in future. More guidance is required to link sustainability considerations to executive emolument. A corporate culture which promotes fair remuneration would benefit multiple stakeholders. Focus should be placed on equal pay for work of equal value.

Value: The views of powerful and informed stakeholder representatives were gauged on responsible and transparent remuneration practices in an emerging market with severe pay inequality.

Keywords:

• director remuneration
• pay gap
• three-part remuneration report
• King IV Report
• South Africa
• stakeholder salience theory

Disclosure statement

No potential conflict of interest was reported by the authors.