Consequences of Increased Compensation Disclosure Transparency: Evidence From CEO Pay in Acquiring Firms

2018 ◽  
Vol 35 (4) ◽  
pp. 667-695 ◽  
Author(s):  
Isabel Yanyan Wang ◽  
Xue Wang ◽  
Daniel Wangerin
Keyword(s):  
Chief Executive Officers ◽  
Poor Performance ◽  
Chief Executive ◽  
Securities And Exchange Commission ◽  
Cross Sectional ◽  
Disclosure Regulation ◽  
Acquiring Firms ◽  
Ceo Pay ◽  
Compensation Disclosure ◽  
Executive Officers

We investigate the consequences of increased compensation disclosure transparency on the pay for chief executive officers (CEOs) in firms that are more prone to a misalignment between manager and shareholder interests. Prior research documents that acquiring CEOs’ pay is insensitive to poor post-deal performance after firms complete large acquisitions. Using the 2006 Securities and Exchange Commission (SEC) compensation disclosure regulation as our empirical setting, we find that this result disappears after firms begin to provide more transparent compensation disclosure. Our cross-sectional analyses show that acquiring firms with higher quality compensation disclosure exhibit greater CEO pay sensitivity to poor post-deal performance after 2006. Our findings indicate that increased compensation disclosure transparency helps strengthen the relation between CEO pay and poor performance in acquiring firms.

scholarly journals Synergy of Top Management Team Demographics, Strategy and Structure: Empirical Evidence on Performance of Public Enterprises

2018 ◽  
Vol 13 (2) ◽  
pp. 108
Author(s):  
Zachary B. Awino ◽  
Bwire Joseph Francis
Keyword(s):  
Organizational Structure ◽  
Chief Executive Officers ◽  
Corporate Strategy ◽  
Theory Of The Firm ◽  
Chief Executive ◽  
Hierarchical Regression ◽  
Future Research ◽  
Cross Sectional ◽  
Corporate Strategies ◽  
Executive Officers

The study conceptualized the collective effect of TMT demographics, corporate strategy and organizational structure on performance of Kenyan PEs. TMT demographics have been posited to influence performance however; this position has been largely tautological and hence required more empirical testing. The study adopted a cross-sectional descriptive survey in which a semi-structured questionnaire was used to obtain data. The questionnaire was administered through a drop and pick method to a sample of 117 Chief Executive Officers. The study used both descriptive and inferential statistics for purposes of data analysis. Descriptive statistics used included mean, standard deviation, coefficients of variation (CVs) and t-tests. Inferential analysis involved the use of multivariate and hierarchical regression analyses. The findings of the study indicated that jointly TMT demographics, corporate strategy and organizational structure significantly influenced performance of PEs. The findings informed theories (upper echelon, configuration, institutional an behavioural theory of the firm) by showing their relevance and applicability in day-to-day organizational operation; decision makers at managerial level are guided on how to choose TMTs with the right mix of demographics, and policy makers on development of guidelines and policies that define the required TMT demographics during recruitment who can develop corporate strategies and adopt structures that bring about stellar performance. The limitations of this study pin-points some areas that need further research in the future. For instance, a qualitative research with variables such as culture and leadership could be considered for future research.

scholarly journals CEO Monitoring and Board Effectiveness: Resolving the CEO Compensation Issue

2018 ◽  
Vol 21 (2) ◽  
pp. 123-134
Author(s):  
Chiraz Ben Ali ◽  
Frédéric Teulon
Keyword(s):  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Board Governance ◽  
Board Effectiveness ◽  
Past Performance ◽  
Compensation Committee ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

This study examines the impact of board governance mechanisms on the pay of Chief Executive Officers (CEOs) using a sample of major French listed companies for the 2009–2011 period. The results show that CEO pay is negatively associated with the presence of a family CEO and positively associated with board size, busy directors, board meetings, and compensation committee independence. We provide further evidence that CEO compensation increases with firm size, and both present and past performance. Our study casts doubt on the effectiveness of formal board attributes in constraining CEO compensation.

scholarly journals CEO Compensation and Firm Performance: The Role of ESG Transparency

2020 ◽  
Vol 4 (2) ◽  
pp. 278
Author(s):  
Chetna Rath ◽  
Florentina Kurniasari ◽  
Malabika Deo
Keyword(s):  
Firm Performance ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Negative Relationship ◽  
Chief Executive ◽  
Long Run ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

Chief executive officers (CEOs) of environmental, social, and governance (ESG) firms are known to take lesser pay and engage themselves in corporate social responsibility activities to achieve the dual objective of the enhancement of firm’s performance as well as benefit for stakeholders in the long run. This study examines the role of ESG transparency in strengthening the impact of firm performance on total CEO pay in ESG firms. A panel of 67 firms for the period of 2014–2019 has been analyzed using the two-step system GMM model, with NSE Nifty 100 ESG Index as the data sample and ESG scores from Bloomberg database as a proxy for transparency. Findings reveal that environmental and governance disclosure scores have the potential to intensify the negative relationship between firm performance and CEO compensation, while social disclosure scores do not. In addition, various firm-specific, board-specific, and CEO-specific attributes have also been considered controls affecting remuneration. This paper contributes to the literature by exploring the effect of exhibiting ESG transparency and its nexus with CEO pay as well as firm performance.

The two sides of CEO pay injustice

2018 ◽  
Vol 16 (1) ◽  
pp. 3-30 ◽  
Author(s):  
Herman Aguinis ◽  
Geoffrey P. Martin ◽  
Luis R. Gomez-Mejia ◽  
Ernest H. O’Boyle ◽  
Harry Joo
Keyword(s):  
Normal Distribution ◽  
Power Law ◽  
Chief Executive Officers ◽  
Risk Sharing ◽  
Chief Executive ◽  
Return On Assets ◽  
Content Type ◽  
Ceo Pay ◽  
Executive Officers ◽  
Two Sides

Purpose The purpose of this study was to examine the extent to which chief executive officers (CEOs) deserve the pay they receive both in terms of over and underpayment. Design/methodology/approach Rather than using the traditional normal distribution view in which CEO performance clusters around the mean with relatively little variance, the authors adopt a novel power law approach. They studied 22 industries and N = 4,158 CEO-firm combinations for analyses based on Tobin’s Q and N = 5,091 for analyses based on return on assets. Regarding compensation, they measured the CEO distribution based on total compensation and three components of CEO total pay: salary, bonus, and value of options exercised. Findings In total, 86 percent of CEO performance and 91 percent of CEO pay distributions fit a power law better than a normal distribution, indicating that a minority of CEOs are producing top value for their firms (i.e. CEO performance) and a minority of CEOs are appropriating top value for themselves (i.e. CEO pay). But, the authors also found little overlap between CEOs who are the top performers and CEOs who are the top earners. Implications The findings shed new light on CEO pay deservingness by using a novel conceptual and methodological lens that highlights systematic over and underpayment. Results suggest a violation of distributive justice and offer little support for agency theory’s efficient contracting hypothesis, which have important implications for agency theory, equity theory, justice theory, and agent risk sharing and agent risk bearing theories. Practical implications Results highlight erroneous practices when trying to benchmark CEO pay based on average levels of performance in an industry because the typical approach to CEO compensation based on averages significantly underpays stars and overpays average performers. Originality/value Results offer new insights on the extent of over and underpayment. The findings uncover an extremely large non-overlap between the top earning and top performing CEOs and to an extent far greater in magnitude than previously suggested.

scholarly journals The relationship between chief executive officer compensation and the size and industry of South African state-owned enterprises

2019 ◽  
Vol 17 ◽  
Author(s):  
Mariette Coetzee ◽  
Magda L. Bezuidenhout
Keyword(s):  
Chief Executive Officers ◽  
Ceo Compensation ◽  
African State ◽  
Chief Executive ◽  
Annual Reports ◽  
Performance Contracts ◽  
Ceo Pay ◽  
Managerial Implications ◽  
Executive Officers ◽  
The Relationship

Orientation: Concerns about exorbitant executive compensation are making headlines, because executives receive lucrative packages despite state-owned enterprises (SOEs) performing poorly. It appears as if chief executive officers (CEOs) are not being held accountable for the performance of the SOEs.Research purpose: The purpose of the study was to determine whether the size and the industry of an SOE had an impact on CEO compensation packages.Motivation for the study: A greater understanding of the relationship between CEO remuneration and the size and type of industry of SOEs would assist with the standardisation of CEO remuneration and linking CEO pay to SOE performance.Research approach/design and method: A multiple regression analysis on a pooled dataset of 162 panel observations was conducted over a 9-year period. Financial data of 18 SOEs were extracted from the McGregor BFA database and the annual reports of SOEs.Main findings: The findings show that the size of an SOE does not influence the total compensation of CEOs. However, larger SOEs pay larger bonuses due to these SOEs being in a stronger financial position to offer lucrative bonuses. CEO’s remuneration was aligned within certain industries.Practical/managerial implications: The findings emphasise the need to link CEO compensation with SOE performance. Standardisation in setting CEO compensation and implementing performance contracts should be considered.Contribution/value-add: The study confirms that CEO pay is not linked to performance and not justified when considering SOE size or industry.

The fattest of the fat cats: observations on Aguinis and colleagues’ findings on CEO pay

2018 ◽  
Vol 16 (1) ◽  
pp. 31-37 ◽  
Author(s):  
Donald C. Hambrick
Keyword(s):  
Chief Executive Officers ◽  
Design Methodology ◽  
Chief Executive ◽  
Prior Work ◽  
Publicly Traded ◽  
Content Type ◽  
Ceo Pay ◽  
Performance Distribution ◽  
Executive Officers

Purpose This paper aims to elaborate upon the work of Aguinis and colleagues (this issue), who showed that there is almost no overlap between the chief executive officers (CEOs; of American publicly traded corporations) who are in the upper tail of the CEO pay distribution and the firms that are in the upper tail of the performance distribution. Design/methodology/approach This paper is an essay/commentary regarding the merits and implications of the paper by Aguinis and colleagues. Findings Drawing upon prior work, the author proposes that CEOs’ tenure-long pay patterns are established – essentially baked-in or hardwired – when CEOs first get hired. For various reasons, some CEOs receive ultra-grand pay packages at the outset of their tenures, and nothing – including mediocre performance – brings about subsequent diminishment of those sweet terms. Research limitations/implications This paper sheds new light on the work by Aguinis and colleagues, in turn contributing new insights about the fairness (or lack thereof) of CEO pay determinations. Originality/value This paper integrates Aguinis and colleagues with prior works on CEO over- and underpayment.

Sharing the pain? An examination of CEO and executive compensation of publicly traded newspaper companies

2019 ◽  
Vol 40 (3) ◽  
pp. 362-390
Author(s):  
John Soloski ◽  
Hugh J. Martin
Keyword(s):  
Executive Compensation ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Financial Health ◽  
Publicly Traded ◽  
Return On Assets ◽  
Return On Equity ◽  
Top Executives ◽  
Ceo Pay ◽  
Executive Officers

This study examines the compensation of newspaper company chief executive officers (CEOs) and other top executives, comparing compensation with key measures of the companies’ financial performance and employment levels. Fixed-effect regressions found only a small relationship between CEO pay and companies’ market value for 2000 to 2013. There was no relationship between pay and return-on-assets or return-on-equity. Unobserved characteristics of individual companies are associated with CEO pay. The implications for the financial health of newspaper companies are discussed.

Celebrity CEOs’ credibility, image of their brands and consumer materialism

2021 ◽  
Vol 38 (6) ◽  
pp. 638-651
Author(s):  
Richard Huaman-Ramirez ◽  
Dwight Merunka
Keyword(s):  
Chief Executive Officers ◽  
Structural Equation ◽  
Brand Image ◽  
Chief Executive ◽  
Cross Sectional Study ◽  
Equation Modeling ◽  
Online Questionnaire ◽  
Cross Sectional ◽  
Content Type ◽  
Executive Officers

Purpose This paper aims to model and estimate how celebrity chief executive officers (CEOs) credibility (i.e. expertise, trustworthiness, attractiveness) is related to their brand image (i.e. functional, sensory/visual). This paper further examines the effects of consumer materialism on both celebrity CEOs’ credibility and the image of their brand. Design/methodology/approach A total of 260 participants knowledgeable of CEOs and their corresponding brands completed an online questionnaire in a cross-sectional study. The data were analyzed through covariance-based structural equation modeling. Findings Celebrity CEOs’ expertise and attractiveness are positively related to both functional and sensory/visual images of their brands. Results also demonstrate the positive effect of materialism on both celebrity CEOs’ credibility and brand image. Research limitations/implications The research was conducted in one country (France) using a cross-sectional design. Additional studies in other settings or countries should be carried out to establish the generalizability of results and strengthen causality inferences. Practical implications CEOs need to understand and manage their key role as celebrities, given the direct influence they may have on consumer brand perceptions and behavior. Originality/value This study refines the relationship between celebrity CEOs’ credibility and brand image. It is the first to introduce and validate the effect of consumer materialism on the perception of celebrity CEOs.

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