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

Reon Matemane (), Tankiso Moloi and Michael Adelowotan
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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

JRFM, 2022, vol. 15, issue 10, 1-19

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.

Keywords: hierarchical analytical process; pairwise comparison; consistency ratio; ESG; performance measures; non-financial; executive compensation (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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