The Effect of Managerial Discretion and National Pension Ownership on Asymmetric Sensitivity of Executive Compensation for Performance

2021 ◽  
Vol 24 (3) ◽  
pp. 1-27
Author(s):  
Chul-Hyung Park ◽  
◽  
Young-Gon Cho
Keyword(s):  
Executive Compensation ◽  
Managerial Discretion

Managerial discretion, say on pay, and CEO compensation

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
J. Samuel Baixauli-Soler ◽  
Gabriel Lozano-Reina ◽  
Gregorio Sánchez-Marín
Keyword(s):  
Executive Compensation ◽  
Ceo Compensation ◽  
Managerial Discretion ◽  
Governance Mechanism ◽  
Global Effect ◽  
Content Type ◽  
Say On Pay ◽  
Negative Effect ◽  
High Level ◽  
The Impact

PurposeThe purpose of this paper is to analyze the influence of managerial discretion on the effectiveness of say on pay (SOP) as a governance mechanism. This goal covers an important gap since the issue of how effective SOP is in promoting more aligned compensation has proved somewhat controversial.Design/methodology/approachThis empirical research opted for a panel methodology for the period 2003–2017, using a sample of large UK listed-companies (specifically, 3,445 firm-year observations). Data were obtained from several sources (Manifest Ltd, BoardEx, Worldscope, Factset Ownership and DataStream).FindingsResults show that managerial discretion plays an important role in the effectiveness of SOP as a mechanism for increasing aligned CEO compensation. While individual discretion (latitude of objectives) exerts a negative effect, contextual discretion (latitude of action) increases SOP effectiveness. The global effect of managerial discretion is positive when there is high level of both individual and contextual discretion.Originality/valueThis empirical study provides evidence concerning an emerging topic in the literature regarding the impact of SOP as a shareholder activism mechanism of corporate governance on executive compensation. By taking managerial discretion into consideration as a relevant moderating factor, it also offers a better explanation of SOP effectiveness as a governance mechanism.

scholarly journals Effects of deregulation on executive compensation revisited: The evidence from three industries

2007 ◽  
Vol 4 (4) ◽  
pp. 275-284
Author(s):  
Theresa Seung Cho
Keyword(s):  
Environmental Change ◽  
Executive Compensation ◽  
Managerial Discretion ◽  
Incentive System ◽  
Executive Pay ◽  
Top Executives ◽  
Structure Level ◽  
Mixed Support ◽  
The Impact

This study examines the linkage between a heightened managerial discretion due to an environmental change on executive compensation. Specifically, we consider the impact of deregulation on three facets of executive pay: structure, level and the degree of disparity among the top executives. The results indicate mixed support for previous findings on the effects of an environmental shift on executive incentive system

Do CEOs receive the pay they deserve? A new vantage on a familiar question

2018 ◽  
Vol 16 (1) ◽  
pp. 47-56
Author(s):  
Adam J. Wowak ◽  
Michael J. Mannor ◽  
Craig Crossland
Keyword(s):  
Labor Market ◽  
Executive Compensation ◽  
Design Methodology ◽  
Chief Executive ◽  
Managerial Discretion ◽  
Conceptual Approach ◽  
Content Type ◽  
The Us ◽  
Ceo Pay ◽  
Power Law Distributions

Purpose This paper aims to explore the implications of Aguinis and colleagues’ study, and in particular their claim that the inconsistency between chief executive officer (CEO) pay and CEO performance is reflective of a fundamental injustice. In doing so, the authors highlight issues regarding the meaning of fairness in the context of CEO pay, the extent to which CEOs can personally affect firm performance and the challenges in ascertaining whether CEOs are overpaid, underpaid or appropriately paid. Design/methodology/approach The authors use a conceptual approach, integrating research on executive compensation and managerial discretion to lend nuance to Aguinis and colleagues’ arguments and findings. Findings The main takeaway of the commentary is that CEO pay fairness is a complex and multifaceted matter that can be difficult to broadly characterize. The evidence offered by Aguinis and colleagues regarding power law distributions and the weak overlap between CEO pay and CEO performance is compelling, but questions about income inequality and pay fairness rarely lend themselves to straightforward answers. Some caution is thus warranted when evaluating Aguinis and colleagues’ conclusion that the US CEO labor market is pervasively unfair. Originality/value The authors urge scholars who build on the work of Aguinis and colleagues to pay heed to the challenges in reconciling the twin concepts of CEO pay and CEO performance.

CEO Compensation and Acquired and Acquiring Companies in Large Corporate Acquisitions

GIS Business ◽  
2016 ◽  
Vol 11 (5) ◽  
pp. 01-13
Author(s):  
Simon Yang
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Ceo Compensation ◽  
Relative Sensitivity ◽  
Matched Sample ◽  
Executive Pay ◽  
Corporate Acquisitions ◽  
Acquiring Firms ◽  
Managerial Power ◽  
To Receive

This paper examines the relative sensitivity of CEO compensation of both acquiring and acquired firms in the top 30 U.S. largest corporate acquisitions in each year for the period of 2003 to 2012. We find that total compensation and bonus granted to executive compensation for acquired companies, not acquiring companies, are significantly related to the amount of acquisition deal even after the size and firm performance are controlled for. Both acquiring and acquired CEOs are found to make the significantly higher compensation than the matched sample firms in the same industry and calendar year. We also find that executives with higher managerial power, as measured by a lower salary-based compensation mix, prior to a corporate acquisition are more likely to receive a higher executive pay in the year of acquisition. The association between executive compensation and managerial power seems to be stronger for acquired firms than for acquiring firms in corporate acquisition. Overall, our findings suggest that corporate acquisition has higher impacts on executive compensation for acquired firm CEOs than for acquiring firm CEOs.

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