Original Research

The chief executive officer pay–performance relationship within South African state-owned entities

Magda L. Bezuidenhout, Mark H.R. Bussin, Mariette Coetzee
SA Journal of Human Resource Management | Vol 16 | a983 | DOI: https://doi.org/10.4102/sajhrm.v16i0.983 | © 2018 Magda L. Bezuidenhout, Mark H.R. Bussin, Mariette Coetzee | This work is licensed under CC Attribution 4.0
Submitted: 31 July 2017 | Published: 14 May 2018

About the author(s)

Magda L. Bezuidenhout, Department of Human Resource Management, University of South Africa, South Africa
Mark H.R. Bussin, Department of Industrial Psychology and People Management, University of Johannesburg, South Africa
Mariette Coetzee, Department of Human Resource Management, University of South Africa, South Africa


Orientation: Over the years, the increase in executive remuneration in state-owned entities (SOEs) has been the subject of intense discussions. The poor performance of some SOEs with highly remunerated executives begs the question of whether chief executive officers in South African SOEs deserve the high levels of remuneration they receive.

Research purpose: This study examined the relationship between chief executive remuneration and several measures of company performance across Schedule 2 SOEs within South Africa.

Motivation for the study: Notwithstanding the widely publicised poor performance of South African SOEs, their importance and relevance remains evident. Regrettably, the literature on what fundamentally drives their performance is lacking.

Research design, approach and method: This quantitative, longitudinal study, conducted over a 9-year period, collected secondary data from the annual reports of 18 Schedule 2 SOEs. The primary statistical technique used in the study was ordinary least square (OLS) multiple regression analysis on a pooled dataset. Chief executive remuneration consisted of fixed salary and total remuneration.

Main findings: A relationship was found between chief executive remuneration and company performance, although mainly an inverse relationship.

Practical and managerial implications: The improved understanding and knowledge of the relationship between chief executive remuneration and SOE performance may be used by the organisation and HR practitioners to direct and inform strategies for organisational effectiveness and business excellence.

Contribution or value-add: This research provides new knowledge to the limited research available on SOEs in South Africa. Further, it reveals an unexplored area of potential research, that is, the importance of irregular, fruitless and wasteful expenditure as a performance measure in SOEs.


CEO remuneration; compensation; company performance; fixed pay; state-owned entities; total remuneration


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