An Evaluation of Strategies to Improve Awareness of Remuneration Clawback in South Africa

Naseeha Mahomed; Danie Schutte

doi:10.25159/1998-8125/19876

Authors

Naseeha Mahomed University of South Africa https://orcid.org/0000-0001-6346-7431
Danie Schutte North-West University

DOI:

https://doi.org/10.25159/1998-8125/19876

Keywords:

accountability, awareness, clawback, ethical compliance, governance, malus, remuneration policy, repayment, risk mitigation, variable remuneration

Abstract

Purpose: The regulatory governance regime in South Africa does not comprehensively address the issue of remuneration clawback, leading to ambiguity in implementation and enforcement. Despite this, JSE-listed companies are increasingly adopting the use of clawback. To address the uncertainty present in the corporate environment, this study aims to provide practical strategies for improving awareness and understanding of clawback.

Methodology: A qualitative exploratory study was conducted with participants from JSE-listed companies to gauge the current level of understanding of the concept of clawback provisions and the practical ramifications. Data were gathered through a semi-structured interview process from ten participants involved in the design or implementation of remuneration.

Findings: This study found that the understanding and awareness of the concept of clawback differed across various levels of the corporate hierarchy. This understanding was hampered by implementation challenges, inadequate statutory guidelines, legal complexities, the costs of recovery, and other factors. In addressing this issue, the article provides practical strategies to enhance exposure to clawback, thereby improving its efficacy as a risk mitigation tool on remuneration.

Originality: This study is the first to integrate the level of awareness and understanding of the concept of clawback into the enhancement of the governance structure related to remuneration.

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