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.

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 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.

Limiting Executive Compensation: The Case of CEOs Hired after the Imposition of 162(m)

2007 ◽  
Vol 22 (4) ◽  
pp. 599-621 ◽  
Author(s):  
Steven Balsam ◽  
David H. Ryan
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Executive Pay ◽  
Internal Revenue ◽  
Compensation Package ◽  
Bonus Pay ◽  
Executive Officers

This study analyzes the effect of Internal Revenue Code section 162(m) on the compensation package of those chief executive officers (CEOs) hired after the imposition of this code section. Research documents that CEO compensation has increased dramatically since the imposition of section 162(m); yet, this research has not distinguished between the effects on the compensation of CEOs already in place when section 162(m) was imposed from those CEOs hired post-162(m) imposition. We focus our analysis on the compensation of CEOs hired after the imposition of section 162(m), because when firms hire a new CEO, they have a better opportunity to redesign the executive pay package. Consequently, we posit that section 162(m) will have its greatest effect when the affected companies change CEOs. Our analysis provides evidence that the increase in salary normally associated with the hiring of a new CEO has been mitigated and there has been an increase in the sensitivity of firm performance to bonus pay for CEOs appointed after 1994 in affected firms.

scholarly journals CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power

2021 ◽  
Vol 19 (4) ◽  
pp. 530-543
Author(s):  
Zulfikar Zulfikar ◽  
Nursiam Nursiam ◽  
Mujiyati Mujiyati ◽  
Rosida Nur Syamsiyati
Keyword(s):  
Chief Executive Officers ◽  
Negative Relationship ◽  
Supervisory Board ◽  
Chief Executive ◽  
Moderating Effect ◽  
Islamic Banks ◽  
Ceo Power ◽  
Executive Officers ◽  
Detrimental Impact

The purpose of the study is to thoroughly outline how the hubris behavior of chief executive officers (CEO) is detrimental to Islamic banks’ (IBs) performance. Specifically, this study attempts to examine the role of the Sharia supervisory board (SSB), board vigilance, and CEO power in the relationship between CEO hubris behavior and decreased IBs’ performance. This study observes IBs’ performance during the period from 2014 to 2020 and develops eight models to test their determinants. Empirical testing of all models shows that CEO hubris has a detrimental impact on IBs’ performance. The moderating impact test shows the following results: firstly, the presence of SSB, which is represented by the reputation of its members, reduces the detrimental impact of hubris behavior by CEOs on IBs’ performance, while that impact, which is represented by member expertise, does not have a moderating effect. Second, the size and independence of the BOC both weaken the negative relationship between CEO hubris and IBs’ performance. Third, CEO power as represented by tenure and ownership has no moderating effect.

scholarly journals Does Educational Background Affect CEO Compensation And Firm Performance?

2011 ◽  
Vol 27 (1) ◽  
Author(s):  
Terrance Jalbert ◽  
Kimberly Furumo ◽  
Mercedes Jalbert
Keyword(s):  
Firm Performance ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Educational Background ◽  
Government Officials ◽  
Select Group ◽  
Executive Officers ◽  
Educational Variables ◽  
Compensation Committees

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="color: black; mso-themecolor: text1;"><span style="font-size: x-small;"><span style="font-family: Times New Roman;">This paper examines the educational background of Chief Executive Officers (CEOs) from large U.S. firms. Forbes CEO compensation lists and Compustat data covering 500 or more firms annually are utilized in the analysis for the period 1997-2006.<span style="mso-spacerun: yes;">&nbsp; </span>Universities are ranked based on the number of graduates placed in top CEO positions and of the total compensation their graduates earn as CEO.<span style="mso-spacerun: yes;">&nbsp; </span>Results show a select group of schools educate a large proportion of top CEOs.<span style="mso-spacerun: yes;">&nbsp; </span>Harvard dominates the CEO market at all educational levels.<span style="mso-spacerun: yes;">&nbsp; </span>Results show low correlation between university placement rankings and compensation rankings.<span style="mso-spacerun: yes;">&nbsp; </span>Regressions on CEO compensation provide additional insights into CEO compensation determinants. Regressions of CEO educational variables on firm performance measures identify links between CEO education and firm performance.<span style="mso-spacerun: yes;">&nbsp; </span>This is the first known paper to examine CEO gender as a determinant of compensation and firm performance.<span style="mso-spacerun: yes;">&nbsp; </span>The evidence here provides hiring and compensation committees valuable information on appropriate hiring, retention and compensation strategies.<span style="mso-spacerun: yes;">&nbsp; </span>It also provides government officials additional insights for designing appropriate regulations.</span></span></span></p>

scholarly journals The Impact of CEO Image on the Consumer Trust in the Organization

2020 ◽  
Vol 31 (2) ◽  
pp. 243-253
Author(s):  
Jurgita Stravinskiene ◽  
Rimantė Hopenienė ◽  
Indre Levickyte
Keyword(s):  
Chief Executive Officers ◽  
Chief Executive ◽  
Corporate Image ◽  
Consumer Trust ◽  
Management Styles ◽  
Psychological Traits ◽  
Executive Officers ◽  
The Impact

Corporate image entails several elements of which the image of Chief Executive Officers (CEOs) is regarded as one of the most significant in building the consumer opinion about the organisation. The study of academic literature has shown that the role of a leader, the impact of management styles for the achievements of the organisation are investigated quite extensively by researchers of leadership, psychology or sociology. However, from the prospect of marketing, the effect of CEO image and its elements on consumer behaviour and establishment of long-term relationships has not been analysed. The aim of the paper was to evaluate an impact of CEO image and its elements on consumer trust in the organisation. The empirical data was collected from 186 respondents who are potential consumers of successful Lithuanian business companies. The survey has showed that the psychological traits and verbal/non-verbal behaviour of the CEOs have the highest impact, and the leadership has the lowest impact on consumer trust on the organisation. The impact on the consumer trust with organisation varies and depends on the assessment of the overall image of CEOs, i.e. the CEO image has the most influence when the consumers are neutral about the overall image of the CEO and the lowest influence when the CEO is evaluated negatively.

Taking it from the Top: How CEOs Influence (and Fail to Influence) their Boards

2004 ◽  
Vol 25 (8) ◽  
pp. 1275-1311 ◽  
Author(s):  
Sally Maitlis
Keyword(s):  
Chief Executive Officers ◽  
Symphony Orchestra ◽  
Chief Executive ◽  
Structural Factors ◽  
Organizational Governance ◽  
Executive Officers ◽  
The Impact ◽  
Longitudinal Case Studies ◽  
Behavioural Dynamics

This article examines how chief executive officers (CEOs) influence their boards in symphony orchestra governance. Traditional governance research has studied the impact of structural factors on the CEO-board relationship, but less attention has been paid to the ways in which influence in these relationships is enacted, and to the role of the CEO in particular. Drawing on two intensive, longitudinal case studies, this article investigates the behavioural dynamics of the CEO-board relationship, identifying four key processes that underpin successful CEO influence: exploiting key relationships, managing impressions, managing information, and protecting formal authority. It concludes with an examination of the interrelated and embedded nature of these processes, and considers the implications for theory and research in organizational governance.

In retrospect: The influence of chief executive officers’ historical relative pay on overconfidence

2021 ◽  
pp. 147612702110048
Author(s):  
J Daniel Zyung ◽  
Wei Shi
Keyword(s):  
Chief Executive Officers ◽  
Empirical Support ◽  
Chief Executive ◽  
Firm Level ◽  
Self Confidence ◽  
Self Worth ◽  
Executive Officers ◽  
Leadership Research ◽  
The Relationship

This study proposes that chief executive officers who have received over their tenure a greater sum of total compensation relative to the market’s going rate become overconfident. We posit that this happens because historically overpaid chief executive officers perceive greater self-worth to the firm whereby such self-serving attribution inflates their level of self-confidence. We also identify chief executive officer- and firm-level cues that can influence the relationship between chief executive officers’ historical relative pay and their overconfidence, suggesting that chief executive officers’ perceived self-worth is more pronounced when chief executive officers possess less power and when their firm’s performance has improved upon their historical aspirations. Using a sample of 1185 firms and their chief executive officers during the years 2000–2016, we find empirical support for our predictions. Findings from this study contribute to strategic leadership research by highlighting the important role of executives’ compensation in creating overconfidence.

CEO statements on racial inequity – (how) do they matter to shareholders?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pyemo Afego ◽  
Imhotep Alagidede
Keyword(s):  
Chief Executive Officers ◽  
Social Issues ◽  
Chief Executive ◽  
Future Research ◽  
Research Approach ◽  
Content Type ◽  
Racial Injustice ◽  
Communication Decisions ◽  
Executive Officers ◽  
The Impact

Purpose The purpose of this study is to explore how citizen protests against perceived acts of racial injustice impact on share prices of companies who weigh in on the protests. In particular, corporate statements that directly address the issues around the protests are identified and possible mechanisms underlying how these may impact shareholder value are discussed. Design/methodology/approach The authors first use a qualitative research approach of content and sentiment analysis to track how companies or their chief executive officers (CEOs) present their stance against racial injustice, as represented by their use of linguistic markers. Then, the authors use an event study methodology to assess the response from stock market participants. Findings The findings suggest that CEOs primarily convey their stance using language that is emotive and empathic. In addition, shareholders earn a significant abnormal return of 2.13%, on average, in the three days following the release of the statements. Research limitations/implications This study considered only US-listed companies. The sample size, also, is relatively small. Institutional and cultural differences across countries may also vary. Thus, future research could explore the extent to which the findings generalize to other contexts. Practical implications Results provide insights to top managers who communicate with various stakeholders on emotionally charged social issues. Findings also offer insights on the timing of trades for investors and arbitrageurs. Social implications Findings contribute to the understanding of corporate behaviour in times of social upheaval. Insights from the study may also be used to inform corporate communication decisions about important social issues. Originality/value This study brings into focus the role that affective appeal and moral emotion can play in evoking motivation for corporate activism, and the impact that this has on investor opinions’ formation process.

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.

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