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Appraising Executive Compensation ESG-Based Indicators Using Analytical Hierarchical Process and Delphi Techniques

Author

Listed:
  • Reon Matemane

    (Department of Financial Management, Faculty of Economic and Management Sciences, University of Pretoria, Cnr of Lynwood Road and Roper Street, Hatfield 0028, South Africa)

  • Tankiso Moloi

    (Department of Accountancy, School of Accounting, College of Business and Economics, University of Johannesburg, Cnr Kingsway & University Roads, Auckland Park, Johannesburg 2092, South Africa)

  • Michael Adelowotan

    (Department of Accountancy, School of Accounting, College of Business and Economics, University of Johannesburg, Cnr Kingsway & University Roads, Auckland Park, Johannesburg 2092, South Africa)

Abstract

Economic, social and governance (ESG) have become topical subjects amidst the deleterious effects of climate change, inequality and similar pressing challenges facing the people and the planet. The main objective of this study was to rank the importance of both the pillars within the ESG model and the five indicators beneath each pillar for the purposes of executive compensation plans through the Analytical hierarchical process (AHP). It is not known which pillar within the ESG model should be prioritised by companies operating in a developing economy context such as South Africa, and neither is it known which of the available indicators should be prioritised when designing executive compensation plans. AHP and pairwise comparison is employed in prioritising important pillars and indicators. The environmental pillar is identified to be the most important among the three pillars. Indicators that are prioritised mirror both the environmental and socio-economic challenges prevalent in South Africa as an emerging economy. Companies’ boards, remuneration committees, investors and policymakers can use the ESG-based indicators that have been prioritised in this study in designing the executive compensation plans. AHP and pairwise comparison are novel approaches used to prioritise the important pillars within the ESG model and the underlying indicators.

Suggested Citation

  • Reon Matemane & Tankiso Moloi & Michael Adelowotan, 2022. "Appraising Executive Compensation ESG-Based Indicators Using Analytical Hierarchical Process and Delphi Techniques," JRFM, MDPI, vol. 15(10), pages 1-19, October.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:10:p:469-:d:944826
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    Cited by:

    1. Kohnert, Dirk, 2023. "Moral Money in Sub-Saharan Africa? On ensuring ethics to drive sustainable investment," MPRA Paper 117779, University Library of Munich, Germany.
    2. Angelo Leogrande & Domenico Leogrande & Alberto Costantiello, 2023. "The Role of Unemployment in the ESG Model at World Level," Working Papers hal-04154793, HAL.
    3. Kohnert, Dirk, 2023. "La monnaie morale en Afrique subsaharienne ? Garantir l'éthique pour favoriser l'investissement durable [Moral Money in Sub-Saharan Africa? On ensuring ethics to drive sustainable investment]," MPRA Paper 117780, University Library of Munich, Germany.
    4. Nattawut Pumpugsri & Wanchai Rattanawong & Varin Vongmanee, 2023. "Development of a Safety Heavy-Duty Vehicle Model Considering Unsafe Acts, Unsafe Conditions and Near-Miss Events Using Structural Equation Model," Sustainability, MDPI, vol. 15(16), pages 1-20, August.

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