AN OVERVIEW OF THE USE OF CLAWBACK AS A GOVERNANCE MECHANISM ON EXECUTIVE REMUNERATION IN SOUTH AFRICA
DOI:
https://doi.org/10.24193/subbnegotia.2023.3.02Keywords:
accountability, clawback, corporate governance, executive remunerationAbstract
The use of malus and clawback provisions has increased in recent years due to the demand for tighter controls on incentive-based compensation. The alignment between executive pay and individual performance creates a culture of responsible decision-making and accountability within an organisation. This paper seeks to evaluate the current state of governance legislation on the clawback of remuneration in the South African context. A systematic literature review was conducted to provide descriptive insight on the technical and procedural approach applied to the clawback of remuneration. These findings were then compared to other countries so that similarities, differences, and areas of further research could be identified. Through detailed content analysis, it was found that the South African governance regime lags behind its international counterparts regarding remuneration clawback. Due to the absence of relevant statutory guidelines, discretion is frequently applied, leading to inconsistent treatment of clawback amongst listed companies. The use of clawback as a risk-mitigation mechanism is also relatively new in South Africa and comparative studies provide useful insight on the technicalities and administration processes applied abroad. The lessons learnt and strategies applied internationally serve as a benchmark for the development of clawback legislation in South Africa.
Article history: Received: May 5, 2023; Reviewed: June 30, 2023; Accepted: August 18, 2023; Available online: September 30, 2023; Available print: September 30, 2023.
JEL Classification: G35, G39
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