LEADERSHIP & STRATEGY
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“ In the context of executive compensation , there is already evidence that companies are making short-term adjustments to executive pay , on the basis that the economy will eventually recover ”
— Deloitte , Executive Compensation Report 2020
“ Most stakeholders will concede that executives should be paid well for their services to shareholders , to business and the economy , and society as a whole ,” comments Deloitte . However the company poses the question of “ what is ‘ fair and reasonable ’ in the context of executive pay ?” and “ more importantly , how should it be determined ?”
In answer to this Deloitte highlights the increasing recognition , supported by the principles of King IV that , “ total pay rather than any one component of pay , should be used in assessing executive pay .”
WHAT IS KING IV™ ?
King IV is the latest edition of the corporate governance code in South Africa . King IV builds on King III , which has been revised in order “ to bring it up to date with international governance codes and best practice ; to align it to shifts in the approach to capitalism ( towards inclusive , integrated thinking across the six capitals ) and to take account of specific corporate governance developments ,” states KPMG . King IV is structured as a report which includes the King Code as well as supplements for SMEs , NPOs , state owned entities , municipalities and retirement funds . The King Code contains principles and recommended practices to achieve governance outcomes . King IV is a voluntary code – unless prescribed by law or as part of a stock exchange listings requirement – South Africa envisions that it will be applicable to all organisations and applied on a ‘ proportionality ’ basis depending on the nature , size and complexity of the organisation .
FEBRUARY 2021