Should states regulate executives’ bonuses?

Executive bonuses have become a contentious issue in recent times, mainly due to their frequency and magnitude. What used to be performance-related compensation for satisfactory results has now evolved into a prerequisite in the employment contracts of many senior managers. For this reason, exhortations for government to intervene have been heard across the country.

However, it is not the duty of government to regulate this particular practice: the shareholders within that company need to be able to crack the whip and draw the line when comes to performance-based compensation.

The alarming trend of shareholders relinquishing their power to management has been the catalyst for some of the disgracefully exorbitant bonuses that have been dished out of late. If shareholders are feeling intimidated by executives – who are effectively their employees - and can no longer control their greedy temperament, the involvement of an inefficient and over-worked government body that is riddled with corrupt officials will certainly not solve the problem.

Sentlenyana Machaba, BBus Sci student, University of Cape Town