Developing a conceptual model linking remuneration governance compliance, executive pay, pay-gap, and performance of JSE firms

Abstract

Purpose: The global interest in the ability of corporate governance to increase a firm’s wealth based on its reaction to corporate scandals/collapses has led to contestation of the agency theory favoured by extant studies compared to stewardship and tournament theories. The study aimed to develop a conceptual model linking RGC (RGC), executive pay, pay performance link, executive-employee pay-gap, and firm performance of JSE-listed firms. Methodology: A pragmatism ontology and convergent parallel mixed approach was employed on selected JSE-listed firms between 2011 and 2020. Secondary data from annual reports, the IRESS database, and extant literature were employed to develop a RGCI and to extract key variables including firm performance measures (FPMs) and key performance indicators KPIs). Descriptive statistics, correlations, regression, and comparative analysis were used to achieve research objectives. Findings: The results indicate a declining RGC among the selected firms, a negative association between RGC and executive pay, a positive connection between RGC and firm performance, a negative moderating effect of RGC on the pay-performance link, a positive moderating effect of RGC on the connection between pay-gap and firm performance, and a disconnection of FPMs from KPIs of the JSE listed firms, suggesting a neglected endogeneity problem. Implications and recommendations: There is a need to enforce and monitor RGC, and to review methodological and theoretical foundations in research that involves governance and executive pay, performance, or pay-gap. This is since the type and nature of KPIs are dissimilar to the FPMs, which is likely to result in research that is disconnected from what is happening in practice. Contribution to knowledge: The study is the first to have selected firms from the full range of JSE listed firms, with specific focus on RGC post-King III and IV, tested RGC moderation effect, compared FPMs against KPIs, studied pay-gap locally and used firm performance proxies aligned with practice. The study has also identified methodological flaws and challenged the agency theory.

Injongo: Umdla wehlabathi jikelele ekukwazini kolawulo lwenkampani ukwandisa ubutyebi befemu ngokusekelwe kwindlela esabela ngayo kumahlazo / ukuwa kwenkampani kukhokelele ekukhuphisaneni kwengcamango yeagency theory ethandwa zizifundo ezikhoyo, xa kuthelekiswa ukulawula/ukuphatha kunye netournament theories. Uphando lujoliswe ekuphuhliseni imodeli yengqiqo edibanisa ukuthotyelwa kolawulo lwemivuzo (iRGC), umvuzo wesigqeba, unxibelelwano lomvuzo wokusebenza, umsantsa kumvuzo womsebenzi osisigqeba, kunye nokusebenza okuzinzileyo kweefemu ezidweliswe kwiJSE. Isikholelo sophando/imethodoloji: Kusetyenziswe ipragmatism ontology kunye nendlela yohlalutyo lwedatha yophandontyilazwi nolweenkcukachamanani (iconvergent parallel mixed approach) ekujongeni iifemu ezikhethiweyo ezidweliswe kwiJSE phakathi kuka2011 no2020. Kukwasetyenziswe idatha elandelayo evela kwiingxelo zonyaka, ulwazi olucwangcisiweyo olukwikhompyutha/idathabheyisi yeIRESS, uncwadi olukhoyo ukuphuhlisa isalathiso seRGC kunye nokukhupha iinguqu eziphambili, kubandakanya amanyathelo okusebenza okuzinzileyo (iFPMs) kunye nezalathisi eziphambili zokusebenza (iKPIs). Kusetyenziswe iinkcukachamanani ezichazayo, ukuhambelana, ubudlelwana kwiinguqu ezixhomekekileyo nezizimeleyo, kunye nohlalutyo oluthelekisayo ukufezekisa iinjongo zophando. Iziphumo: Iziphumo zibonisa ukuhla kweRGC phakathi kweefemu ezikhethiweyo, unxulumano olungalunganga phakathi kweRGC kunye nomvuzo wesigqeba, unxibelelwano oluhle phakathi kweRGC kunye nokusebenza okuzinzileyo, ifuthe elingalunganga lokumodareyitha leRGC kunxibelelwano lokuhlawula ukusebenza, ifuthe elihle lokumodareyitha leRGC kunxibelelwano phakathi komsantsa kumvuzo kunye nokusebenza okuzinzileyo, kunye nokwahlukana kweFPMs ezivela kwiKPIs zeefemu ezidwelisiweyo kwiJSE, okubonisa ingxaki yempembelelo engakhathalelwanga. Iziphumo kunye neengcebiso: Kukho isidingo sokunyanzelisa nokubeka iliso kwiRGC, kunye nokuphonononga iziseko zesikhokelo sophando kunye nethiyori kuphando olubandakanya ulawulo kunye nomvuzo wesigqeba, ukusebenza, okanye umsantsa kumvuzo. Oku kungenxa yohlobo kunye nokungafani kokudalwa kweKPIs neFPMs, okunokwenzeka ukuba ziphumele kuphando olwahlukeneyo koko kwenziwayo. Igalelo kulwazi: Olu phando lolokuqala ukuba nezi nkalo zilandelayo: iifemu ezikhethiweyo ezivela kuluhlu olupheleleyo lweefemu ezidweliswe kwiJSE, ngokugxininisa ngokukodwa kwiRGC post-King III kunye neIV; ifuthe lokumodareyitha leRGC elivavanyiweyo; ukuthelekiswa kweFPMs neKPIs; ukufundwa komsantsa kumvuzo ngokwalapha/ngokwasekuhlaleni; lwaze lwasebenzisa abameli bokusebenza okuzinzileyo abahambelana noko kwenziwayo okanye umsebenzi. Olu phando luye lwachonga neziphene zesikhokelo sophando laze lwacela umngeni weagency theory.

Sepheo: Thahasello ya lefatshe ya bokgoni ba puso ya koporasi ba ho eketsa leruo la feme ho latela karabelo ya yona ho manyofonyofo/ho putlama ho entse hore ho be le phehisano ya kgopolo ya lefapha le ratwang ke diphuputso tse seng di ntse di le teng, ha di bapiswa le botsamaisi le dikgopolo tsa tlhodisano. Phuputso ena e ikemiseditse ho hlahisa moralo wa mohopolo o hokahanyang boikamahanyo ba puso ya meputso (RGC), meputso ya batsamaisi, lehokelo la ho lefshwa, sekgeo sa meputso ya basebetsi ba botsamaisi, le tshebetso ya feme ya difeme tse lenaneng la JSE. Mekgwa e sebedisitsweng phuputsong: Ho sebedisitswe katamelo ya phuputso ya se teng ya nnete le moelelo le e kopantseng bongata le boleng ho sheba difeme tse thathamisitsweng ho JSE pakeng tsa dilemo tsa 2011 le 2020. Dintlha tsa bobedi tse tswang ditlalehong tsa selemo le selemo, datapeisi ya IRESS, le dingodilweng tse seng di ntse di le teng di ile tsa sebediswa ho hlahisa indekse ya RGC le ho ntsha dintlha tse ka sehloohong, ho kenyelletswa mehato ya tshebetso ya difeme (di-FPM) le matshwao a bohlokwa a tshebetso (di-KPI). Ho sebedisitswe dipalo-palo tse hlalosang, dikamano, ho kgutlela morao, le tlhahlobo ya papiso ho fihlella dipheo tsa patlisiso. Diphumano: Diphetho di bontsha ho fokotseha ha RGC hara difeme tse kgethilweng, mokgatlo o fosahetseng pakeng tsa RGC le meputso ya batsamaisi, kamano e ntle pakeng tsa RGC le tshebetso ya feme, phello e mpe ya RGC ho lehokela la tshebetso ya meputso, phello e ntle ya tekanyetso ya RGC mabapi le kamano pakeng tsa sekgeo sa meputso le tshebetso ya feme, le ho kgaoha ha di-FPM ho tswa ho di-KPI tsa difeme tse thathamisitsoeng ho JSE, ho fana ka maikutlo a bothata bo sa tsotellweng ba ho qetela. Diphello le dikgothaletso: Ho na le tlhokahalo ya ho qobella le ho beha leihlo RGC, le ho lekola mekgwa le metheo ya kgopolo-taba diphuputsong tse amang puso le meputso ya batsamaisi, tshebetso, kapa sekgeo sa meputso. Sena se bakwa ke hore mofuta le sebopeho tsa di-KPI di fapane le tsa di-FPM, e leng ntho e ka nnang ya fella ka patlisiso e sa amaneng le se etsahalang tshebetsong. Tlatsetso tsebong: Thuto ena ke ya pele ya ho ba le: difeme tse kgethilweng ho tswa lethathamong le felletseng la difeme tse thathamisitsweng ho JSE, tse tsepamisitseng maikutlo ho RGC kamora Morena wa III le IV; phello e entsweng teko ya RGC; di-FPM tse bapisitsweng le di-KPI; sekgeo sa meputso se ithutilweng lehaeng; le tshebediso ya baemedi ba difeme ba tshebetso e tsamaellanang le tlwaelo. Phuputso ena e boetse e hlwaile mefokolo ya mekgwa le ho phephetsa kgopolo ya setsi.