Title page for ETD etd-08042012-194807

Document Type Master's Dissertation
Author Shaw, Paul Anthony
URN etd-08042012-194807
Document Title CEO pay-performance sensitivity in South African financial services companies
Degree MBA
Department Gordon Institute of Business Science
Advisor Name Title
Dr M Bussin Supervisor
  • ceo remuneration
  • pay-performance sensitivity
  • CEO compensation
  • financial services
  • South Africa
Date 2012-03-08
Availability unrestricted
Orientation: CEO remuneration has attracted attention over the past two decades, with significant renewed interest in light of the role it is said to have played in contributing to the global financial crisis. At the heart of the issue is the perceived weak relationship between corporate performance and CEO remuneration.

Research purpose: The purpose of this study was to describe the relationship between corporate performance and CEO remuneration within the South African financial services industry.

Motivation for the study: The motivation for the study was to develop a deeper understanding of the relationship within the South African context, as South African banks have remained stable and profitable through the financial crisis.

Research design approach and method: The research was a quantitative, archival study, conducted over a six year time period. The primary statistical techniques used in the study included: bivariate regression analysis, multiple regression analysis, and analysis of variance.

Main findings/results: The primary finding was that the relationship between corporate performance and CEO remuneration is favourable (moderate to strong), but has experienced a decline. This finding emphasises the impact that macroeconomic trends have on the relationship and the role of managerial power during periods of economic uncertainty.

The research further describes the structural changes in CEO remuneration with a shift away from variable pay.

Practical managerial implications: The results suggest that the use of discretion and the growing impact of managerial power will be key challenges that iii remuneration committees will face in maintaining a favourable relationship between the two constructs in the future.

Contribution/value add: The study provides context to CEO remuneration within a South African framework. It further provides provides a key insight that the relationship between corporate performance and CEO pay is highly dependent on the macroeconomic environment, and that CEO pay in the South African financial services is experiencing structural changes.

2011 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.

Please cite as follows:

Shaw, PA 2011, CEO pay-performance sensitivity in South African financial services companies, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-08042012-194807/ >


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