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earningsBusinessLive writes that as shareholder activism grows in scope and intensity, an increasing number of studies have been done internationally to determine its effectiveness.  

A group of Stellenbosch academics has researched the effect of public shareholder activism on executive remuneration policies and practices of JSE-listed companies and state-owned enterprises.  This was based on newspaper articles and covered the period from January 2010 to December 2017.  Most activists’ apprehensions centred on the disclosure of performance-based incentives and justifications provided for bonuses in light of poor financial performance.  Others wanted answers on the unequal treatment of executives, the link between pay and performance, noncompliance with King III, the growing wage gap, retirement benefits, vesting periods of stock options and the lack of executive pay-related transparency in general.  The research found that executives’ total pay decreased significantly in the year after they were publicly targeted.  The same applied to cash bonuses and performance incentives.  The decline in total pay was significantly larger for CEOs than for non-CEOs.  Although the use of stock options increased over the research period, there wasn’t enough data to test whether negative media coverage had any effect in that regard.  In explanation of the general effect, the point was voiced that that by raising their concerns in public, shareholders were able to place executives in the spotlight.

  • Read the full original article in this regard by Linda Kallis, Kristen McKenzie, Suzette Viviers & Nadia Mans-Kemp at BusinessLive

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