An archetypical analysis of chief executive officers in the mining sector according to their remuneration and company performance: a resource based view

Abstract

The growth in the mining sector post 1994 saw many CEO s enjoy exorbitant levels of financial prosperity particularly in relation to th e mining workforce . The pay disparity between the remuneration of CEO s and the average worker contributed to instability and labour unrest. While there has been extensive research conducted on the relationship between CEO remuneration and company performance, questions around the justification of exorbitant CEO remuneration levels have persisted. One of the shortcomings of these studies have been understanding company performance as limited to financial indicators. For this reason, Resource - Based theory was used in this study to focus on CEOs as tangible, heterogeneous and immobile assets, who could influence company performance by creating a firm's competitive advantage. In order to investigate this, a mixed - method research design was utilised to ascertain the relationship between CEO remune ration and company performance. The data for the quantitative study was collected using an archival method by sourcing secondary data obtained from the sampled companie s' annual integrated reports. Statistical tests were performed to test the relationsh ip between CEO remuneration and company performance of mining companies listed on the JSE over the period of 2014 to 2018. This was followed by the qualitative thematic analysis which utilised online information published about four CEOs sampled according to their pay/performance relationships (namely high earning/high performing; high earning/low performing; low earning/high performing and low earning/low performing). The VRIO framework was utilised in conjunction with the thematic analysis to assess the extent to which each of the selected CEOs could be identified as valuable, rare, inimitable and organised. Finally, t he demographic characteristics and leadership attributes of these CEOs were collectiv ely aligned to particular l eadership archetype s. This study found that despite company performance levels experiencing negative growth and volatility, CEO remuneration remained stable and experienced positive growth throughout the period . The qualitative analysis and the application of the VRIO framework wa s conducted in order to explor e reasons why this disparity may continue to exist. The analysis of the differences in demographic characteristics and leadership attributes between these four CEOs provided a possible j ustification for the disparity in t he levels of remuneration. It was found that some CEOs high levels of remuneration could be justified by virtue of their well - developed leadership skills. In particular CEOs need softer skills (such as communication, openness, relationship - building and stakeholder engagement) and to draw on the communicator, builder and coach archetypes in order to create a sustained competitive advantage within companies.