Original Research

Changes in South African executive share-based remuneration

Gretha Steenkamp, Nicolene Wesson
Journal of Economic and Financial Sciences | Vol 11, No 1 | a216 | DOI: https://doi.org/10.4102/jef.v11i1.216 | © 2018 Nicolene Wesson | This work is licensed under CC Attribution 4.0
Submitted: 27 April 2018 | Published: 29 November 2018

About the author(s)

Gretha Steenkamp, School of Accountancy, University of Stellenbosch, South Africa
Nicolene Wesson, University of Stellenbosch Business School, Stellenbosch University, South Africa


Orientation: Institutional theory proposes that companies respond to environmental factors (such as changes in accounting requirements and the economy) in order to gain or retain legitimacy. As such, environmental factors can affect executive remuneration paid by companies.

Research purpose: The purpose was to determine whether the implementation of International Financial Reporting Standard (IFRS) 2 as well as the financial recession affected the characteristics of share-based remuneration paid to South African executives.

Motivation for the study: Stakeholders should be aware of whether environmental factors influence business practice relating to share-based remuneration (especially in an emerging economy, such as South Africa, where international evidence might not be applicable).

Research design/approach and method: Share-based remuneration details of the chief executive officers of 28 South African listed companies were obtained for the period 2002–2009 (these dates were chosen to include both the effective date of IFRS 2 and the financial recession). Data were analysed (using analysis of variance and generalised estimating equalisation techniques) to determine whether there were statistically significant differences in the share-based executive remuneration between the period before and after the effective date of IFRS 2, as well as before and during the financial recession.

Main findings: Share options usage decreased after the effective date of IFRS 2, and even further during the recession. Share-appreciation rights were increasingly used after the effective date of IFRS 2 and seemed to have replaced share options subsequent to the implementation of IFRS 2. The use of share purchase plans decreased during the recession and was replaced by performance shares. Performance vesting conditions were more prevalent in share-based remuneration schemes in the post-IFRS 2 period.

Practical/managerial implications: Shareholders and regulators should take cognisance of the fact that business practice in respect of share-based remuneration is affected by new accounting standards and the economy.

Contribution/value-add: This study addressed the knowledge gap in the literature regarding the effect of IFRS 2 and recession on executive share-based remuneration in emerging economies, and specifically in South Africa.


share-based remuneration; executive directors; directors’ remuneration; institutional theory; IFRS 2; recession; share options; share-appreciation rights; share purchase plans; performance shares


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Crossref Citations

1. Camouflaged Compensation: Do South African Executives Increase Their Pay through Share Repurchases?
Gretha Steenkamp, Nicolene Wesson, Eon v. d. M. Smit
Journal of Risk and Financial Management  vol: 16  issue: 3  first page: 177  year: 2023  
doi: 10.3390/jrfm16030177