The research objective is to verify if the variable compensation of executives is established based on the relative performance evaluation, based on their abilities, or if there is the so-called "lucky payment", in which they are benefited or harmed by oscillations that affect the entire market. The literature shows that variable remuneration is characterized as one of the main mechanisms to align interests between investors and executives. In Brazil, there is evidence of a relationship between variable remuneration and managers' performance, but a gap to be filled consists of identifying whether or not such remuneration disregards the systematic component of performance, linked to movements and shocks that affect the entire sector. The sample comprises the listed companies listed in B3, except those operating in regulated segments, such as financial institutions and public utilities. The period of analysis comprises the years 2010 to 2015, where the information on remuneration is now disclosed through the Reference Form. After self-selection control, because of companies that filed injunctions to avoid disclosure of executive compensation, evidence indicates that executives are usually paid "by luck." Only when the market performs negatively and the executive performs above it is that relative performance employed. The research assists in a better understanding of the remuneration policy of Brazilian organizations, complementing other research on the temporal aspect and the comparison of the peers' performances in the sectors.
Relative performance evaluation and executive compensation: Evidence from Chinese listed companies
