Abstract
M.Comm. (Industrial Psychology)
With the implementation of King III in 2010 and the promulgation of the new Companies Act in 2011, the corporate governance landscape in South Africa was irrevocably changed. Simultaneously, there was an increase in the protestations against the perceived excesses of executive1 remuneration packages. The question posed in this research study was what does adherence to the spirit of corporate governance with regard to executive remuneration entail?
The literature study explores the perceived separation between ownership and control, as well as attempts at controlling this separation via structured executive remuneration packages. It further provides an overview of the relative efficacy of voluntary codes and compulsory codes. Various methods of determining executive remuneration are investigated and the possible shortcomings of each are identified. Sixteen semi-structured, in-depth interviews, equally divided amongst four interest groups in the field of executive remuneration, were conducted. A content analysis of the qualitative data that emerged from the interviews resulted in 39 first-order themes that were then iterated to 11 second-order themes. These second-order themes were categorised into two sets, namely five that are indicative of behaviour in support of adherence to the spirit of corporate governance with regard to executive remuneration, and six that are indicative of behaviour that undermines the spirit of corporate governance in this regard. The five themes indicative of behaviour in support of adherence to the spirit of corporate governance were: problem recognition, sustainable development, embracing governance, remuneration management competence, and ethical intent. The six themes found to indicate behaviour that undermines adherence to the spirit of corporate governance with regard to executive remuneration were: shareholder appeasement, misrepresentation, elitism, justification, arrogance, and intentional amorality. It emanated from the findings that greater social debate should be stimulated on how ethics can be brought into the domain of executive remuneration. A potentially important facilitator of such debate could be tertiary education institutions responsible for management education integrating the ethics of executive remuneration in curricula. It is further recommended boards, who are tasked with the governance of their organisations, be made aware of the behavioural manifestations that support or undermine adherence to the spirit of governance as it relates to executive remuneration. Remuneration consultants could also benefit from these findings, and could assist organisations to design fair and responsible systems of remuneration for executives and senior employees.