An Examination of the Quality of the Variable Portion of Executive Directors’ Remuneration for Large South African Listed Companies

Through the use of a constructed disclosure index and content analysis of remuneration reports, this study examines the quality of the disclosures of the variable portion of executive directors' remuneration of the top 40 companies listed on the Johannesburg Stock Exchange (JSE) by market capitalisation. The study attempts to determine both the quality of the disclosures provided by companies and where disclosures are lacking sufficient detail and could be improved, as well as examine the extent to which companies are linking variable remuneration with key performance indicators (KPIs). The findings show the quality of disclosure is superior for companies which have their primary listing on the London Stock Exchange, whereas there is a wide variation of disclosure quality of companies with their primary listing on the JSE and not all companies are clearly disclosing the link between remuneration and KPIs. There is therefore a need to better link KPIs, the determination of variable remuneration, and the companies' strategies.