Executive pay, committee diversity and financial performance of JSE-listed companies

PurposeThis paper investigates the effect of executive pay and committee diversity on the financial performance of JSE-listed companies.MotivationThere are few to no studies on the topic in South Africa, even though executive pay has been a focal point in the country due to the regulatory landscape intertwined with the JSE, Africa's largest capital market.Design/Methodology/ApproachWe employ a quantitative and deductive design with the GLS method to analyse 660 firm-year panel data from non-financial listed firms on the JSE spanning 2016–2022.Main findingsThe results show that executive pay, female presence on boards, and female chair on remuneration committee demonstrate a significant positive relationship with financial performance, while Black directors and CEO duality demonstrate a significant negative effect on performance.Practical implicationsThe study outcome calls for boards and remuneration committees of JSE-listed companies to use data-based context-sensitive methods for executive pay development to achieve better operational results while avoiding rigid numerical performance assessment and creating gender-sensitive governance standards that enable women in leadership roles.Novelty/ContributionOur study contributes to the literature gap in Sub-Saharan Africa, especially South Africa, on the topic and advocates for board diversity and the keen interest of shareholders and investors in the work and composition of the remuneration committee due to recent controversies in the compensation of company directors across the globe.