Abstract

STRUWIG, Miemie  and  VAN RENSBURG, Heidi Janse. Sustainability measures as key performance indicators in executive remuneration contracts of Johannesburg Stock Exchange listed companies. JCMAN [online]. 2025, vol.22, n.1, pp.1-23. ISSN 1815-7440.  https://doi.org/10.35683/jcman1119.294.

PURPOSE OF THE STUDY: Managerial short-termism is likely to prevent managers from investing in stakeholder initiatives that contribute to long-term value creation beneficial to all stakeholders when sustainability targets are omitted from executive remuneration contracts. Although it is necessary to implement mechanisms to encourage management to align the interests of all stakeholders, it is not clear what sustainability targets are used in executive remuneration contracts of Johannesburg Stock Exchange (JSE) listed companies. This paper investigates which sustainability targets are used in executive remuneration contracts of Johannesburg Stock Exchange (JSE) listed companies. DESIGN/METHODOLOGY/APPROACH: A qualitative research design was selected for this research, and content analysis was used. The top 10 companies listed on the JSE, ranked according to the highest Chief Executive Officer (CEO) remuneration in 2022, were included in the sample. The remuneration reports of the top ten companies for the past five years were downloaded from the respective company websites, and the 50 reports were content analysed. Four steps were used in the research process to collect data. FINDINGS: The results showed that two companies have integrated sustainability indicators in their remuneration reports for all five years, 2018 to 2022. Most companies had only started incorporating sustainability targets in remuneration reports in 2021. Linking climate change to remuneration took place in 2022, whereas it was not used in the remuneration reports of previous years RECOMMENDATIONS/VALUE: As sustainability is becoming increasingly important, companies should include some sustainability requirements in their remuneration reports. It is proposed that remuneration reports should include variables relating to climate change strategies, diversity and inclusion initiatives and greenhouse gas emissions. MANAGERIAL IMPLICATIONS: It is suggested that companies should not use broad terms such as sustainability to indicate sustainability factors in their remuneration reports. Rather, they should use actual Global Reporting Initiative (GRI) framework terms instead of sustainability jargon. JEL CLASSIFICATION: M40

Keywords : Key performance indicators; JSE listed companies; remuneration contracts; sustainability measures.

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