MBA & MM Theses

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    Firm performance as a determinant of executive compensation in South Africa
    (2013-10-10) Essop, Zahir
    In line with the Pay-for-Performance model and agency theory this study examines whether executive compensation is reflective of firm performance in South Africa. South Africa presents a unique institutional context. It has mature regulatory institutions but due to socio-economic issues post Apartheid such as income disparities and high unemployment South Africa’s corporate governance system is evolving from a shareholder to a stakeholder governance system. The results of this study thus yield new insights for executive compensation research. Executive compensation data for the Johannesburg Securities Exchange (JSE) Top 40 firms over a five year period was compiled. A comprehensive measure of executive compensation including salaries, benefits, bonuses, shares and share options was used. Both market and accounting based measures of firm performance were used. These included Total Shareholder Return and Return on Assets. A panel regression analysis detected a moderate positive pay - performance relationship in South Africa. The results of this study suggest that the Pay-for-Performance or agency model with its exclusive focus on aligning executive compensation to shareholder interests has to be extended to take into account other stakeholder interests. It is only then that the model can be used to explain executive compensation levels in countries with stakeholder governance systems.
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    Expatriate Compensation Preferences
    (2012) Raffray, Benoit
    To be successful in a globalised environment, it is necessary not only to have the free flow of capital and technology, but also the ability to relocate human capital across borders. Expatriates cost corporations three to five times more than local employees and the costs of expatriate failure can be high. It is therefore important for multinational corporations to attract and retain a competent and motivated cadre of expatriates. Since compensation plays an important role in employee motivation and retention, it is necessary to identify those remuneration aspects perceived to be important by expatriates. Experts in expatriate remuneration were interviewed to identify the variables that are important in expatriate remuneration. From these interviews, a questionnaire was designed, piloted and sent to expatriates in seven South African multinational companies. Conjoint analysis was used to examine the relative importance of the identified variables. The relative importance of these variables was also examined according to different demographic characteristics of the sample. The results show that of the compensation package variables, base salary is perceived to be the most important followed by benefits, currency in which the expatriate is paid, equity, taxation method, and lastly the cost of living adjustment. In terms of the different benefits and allowances, housing is perceived to be the most important followed by career opportunities of the assignment, education allowance, health benefits, partner assistance, hardship allowance, and finally foreign service premium.