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1 – 10 of over 85000The purpose of this paper is to investigate the nature of advice that the remuneration consultants offer to the companies on executive pay. It explores how the advice offered…
Abstract
Purpose
The purpose of this paper is to investigate the nature of advice that the remuneration consultants offer to the companies on executive pay. It explores how the advice offered affects the level of executive remuneration. Furthermore, it investigates whether the nature of advice offered forms part of the reasons why remuneration consultants have been criticised to be correlated with high executive pay.
Design/methodology/approach
This paper analysis the data obtained from interviewing remuneration consultants from prominent consultancy firms that operate in the UK and the USA.
Findings
This paper demonstrates that remuneration consultants’ advice on executive remuneration is not always objective. The nature of advice depends on whether the consultants have a balance of portfolio of companies (self-interest) or whether they have the courage to stand up to confrontations from the executives (fear of executives). This study shows that the purpose of using remuneration consultants in advising on executive remuneration is defeated. Also, the practice pushes up pay levels.
Research limitations/implications
The research focused on large consultancy firm operating in the UK and/or the USA. Access to the participants was very difficult due to their busy schedules.
Practical implications
This paper demonstrates the effect that lack of best practice on benchmarking is partly responsible for the high executive pay levels.
Social implications
This paper will inform companies on the nature of advice that remuneration consultant’s offer and its effect on pay levels. Secondly, it will provide the shareholders with vital information they require to vote on remuneration policy in the annual general meeting.
Originality/value
This paper demonstrates the effect that lack of best practice on benchmarking is partly responsible for the high executive pay levels. This paper will inform companies on the nature of advice that remuneration consultant’s offer and its effect on pay levels. Secondly, it will provide the shareholders with vital information they require to vote on remuneration policy in the annual general meeting. Lastly, it informs policymakers on the grey areas of practice that requires best practice.
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Pedro Ortín‐Ángel and Albert A. Cannella
We develop theoretical arguments from the efficiency wage model (Shapiro & Stiglitz, 1984) to provide better understanding of Fama’s (1980) seminal notion that executive labor…
Abstract
We develop theoretical arguments from the efficiency wage model (Shapiro & Stiglitz, 1984) to provide better understanding of Fama’s (1980) seminal notion that executive labor markets contribute to the alignment of executive and shareholder interests. We show how the efficiency wage model can be integrated with several other theories of executive turnover. Furthermore, the model allows for predictions that have received very little analysis to date, such as the effect of firm risk and executive salaries on turnover. We test predictions from the model on a sample of executives from 280 manufacturing firms observed annually from 1986 to 1992. Our sample includes data on over 12,000 observations and nearly 1,700 employment terminations. The results are consistent with the main predictions of the efficiency wage model. Holding performance constant, boards of directors are less patient with (more likely to dismiss) executives who have lower salaries and those in higher risk firms.
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Lisa M. Victoravich, Pisun Xu and Huiqi Gan
The purpose of this paper is to examine the association between institutional investor ownership and the compensation of executives at US banks during the financial crisis period.
Abstract
Purpose
The purpose of this paper is to examine the association between institutional investor ownership and the compensation of executives at US banks during the financial crisis period.
Design/methodology/approach
This paper uses a linear regression model to examine the association between institutional ownership and the level of executive compensation at US banks.
Findings
Institutional investors influence executive compensation at banks with the impact being most pronounced for the CEO. Ownership by the top five investors is associated with greater total compensation. Active investors have the strongest impact on executive compensation as evidenced by a positive association between active ownership and both equity compensation and total compensation. As well, active ownership is negatively associated with bonus compensation. The paper also finds that passive and grey investors influence compensation but to a less significant extent than active investors.
Research limitations/implications
The results suggest that the monitoring role of active and passive institutional investors is different in the banking industry. As well, institutional investors were likely a driving factor in shaping the compensation packages of the top executive team during the financial crisis period.
Practical implications
Stakeholders at banks should be aware that not all types of institutional investors act as effective monitors over issues such as controlling the amount of executive compensation paid to the highest paid executive, the CEO. Prospective investors should consider the type of institutional investor that owns large blocks of equity when making an investment decision. Namely, the interests of existing institutional investors may differ from their own interests.
Originality/value
This paper provides a new perspective on the monitoring roles played by different types of institutional investors. Furthermore, it provides a more comprehensive analysis by investigating the role of institutional investors in shaping the compensation packages of CEOs and other top executives including chief financial officers (CFOs) who play a vital role in risk management at banks.
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Rishi Kappal and Dharmesh K. Mishra
This paper aims to explore the interlinkage and association of executive isolation at the workplace faced by Chief Executive Officer (CEO) of a not-for-profit organizations (NPOs…
Abstract
Purpose
This paper aims to explore the interlinkage and association of executive isolation at the workplace faced by Chief Executive Officer (CEO) of a not-for-profit organizations (NPOs) and its impact on the attrition at the C-Suite Professionals (CXO), Direct reports of CEO levels.
Design/methodology/approach
Executive isolation at top management with reference to the CEO level has emerged as a major challenge that is faced by NPOs with the effect being multiplied by the pandemic and remote working. This paper intends to examine the relevance of the impact of executive isolation experienced by top management leading to increase in the attrition at the CXO levels in NPOs due to their increasing dissatisfaction. To make a thorough study, a detailed literature review has been done followed by qualitative research methods of individual interviews, group interviews and surveys to ascertain the implications of CXO-level executive isolation on the CXOs attrition in NPOs.
Findings
The executive isolation experienced by CEOs makes them develop certain preconceived set of beliefs. By being isolated from the direct report CXOs and action on the ground and working from a remote location, they tend to inculcate their own decisions into the direct reports, thereby depriving them of authority and autonomy. This starts leading to the high level of CXO attrition.
Research limitations/implications
This paper has tried to study the linkage of the executive isolation at top management with the levels of CXO dissatisfaction leading to attrition at NPOs. This topic appears to be much-needed to be understood, especially when the new normal of work is being redefined.
Practical implications
The paper enumerates that the NPOs can attempt to deal with the challenges of engaging CXOs through virtual working; however, the mindfulness can be impacted by the experiences of executive isolation at management levels. This, in turn, can lead to lower morale, compromised performance resulting in CXO-level dissatisfaction and attritions.
Originality/value
With the limited awareness about executive isolation and its multiplier effect due to the pandemic, NPOs, like other enterprises, had to resort to virtual working. However, executive isolation at management levels apparently leads to reduction in the CXO-level engagement with the teams under them and with the CEO to which they report. This aspect can lead to the NPOs not being able to achieve their impact objectives during the outward turbulence and inward challenges of CXO-level attritions because of the CXO-level dissatisfaction.
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Amy Yarbrough Landry and Larry R. Hearld
The purpose of this study is to examine the prevalence of different workplace learning models in healthcare organizations and examine whether these learning styles and activities…
Abstract
Purpose
The purpose of this study is to examine the prevalence of different workplace learning models in healthcare organizations and examine whether these learning styles and activities differ across hierarchical level.
Design/methodology/approach
Results of a survey of US healthcare executives and executive‐track employees were analyzed (n=492). The survey asked for information on workplace learning style, hierarchical position, and workplace learning opportunities.
Findings
Employees at all levels of the organization report learning in a variety of ways in the workplace, including through transmission, experience, communities of practice, competence, and activity. However, employees at lower hierarchical levels report fewer workplace learning opportunities than those at higher levels.
Research limitations/implications
The study utilizes cross‐sectional data on healthcare executives who are relatively homogenous with regard to race and gender.
Practical implications
The results of the study are positive in that a variety of workplace learning opportunities are available to executives and executive‐track employees. However, placing more emphasis on the development of director and manager level employees would further enhance the talent pool for executive level leadership in US hospitals.
Originality/value
The study demonstrates differences in learning styles and opportunities for learning across hierarchical level.
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Alfonsina Iona, Leone Leonida and Alexia Ventouri
The aim of this paper is to investigate the dynamics between executive ownership and excess cash policy in the UK.
Abstract
Purpose
The aim of this paper is to investigate the dynamics between executive ownership and excess cash policy in the UK.
Design/methodology/approach
The authors identify firms adopting an excess policy using a joint criterion of high cash and cash higher than the target. Logit analysis is used to estimate the impact of executive ownership and other governance characteristics on the probability of adopting an excess cash policy.
Findings
The results suggest that, in the UK, the impact of the executive ownership on the probability of adopting an excess cash policy is non-monotonic, in line with the alignment-entrenchment hypothesis. The results are robust to different definitions of excess cash policy, to alternative specifications of the regression model, to different estimation frameworks and to alternative proxies of ownership concentration.
Research limitations/implications
The authors’ approach provides a new measure of the excess target cash for the firm. They show the need to identify an excess target cash policy not only by using an empirical criterion and a theoretical target level of cash, but also by capturing persistence in deviation from the target cash level. The authors’ measure of excess target cash calls into questions findings from previous studies. The authors’ approach can be used to explore whether excess cash holdings of UK firms and the impact of managerial ownership have changed from before the crisis to after the crisis.
Practical implications
The authors’ measure of excess target cash allows identifying in practice levels of cash which are abnormal with respect to an equilibrium level. UK firms should be cautious in using executive ownership as a corporate governance mechanism, as this may generate suboptimal cash holdings and suboptimal firm value. Excess cash policy might be driven not only by a poor corporate governance system, but also by the interplay between agency costs of managerial opportunism and cost of the external finance which further research could explore.
Originality/value
Actually, “how much cash is too much” is a question that has not been addressed by the literature. The authors address this question. Also, this amount of cash allows the authors to study the extent to which executive ownership contributes to explain the out-of-equilibrium persistency in the cash level.
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Albert A. Vicere and Virginia T. Freeman
Executive education can be a powerfulcatalyst for both personal andorganisational development. Howcorporations are utilising this potentialwas the subject of an internationalstudy…
Abstract
Executive education can be a powerful catalyst for both personal and organisational development. How corporations are utilising this potential was the subject of an international study of executive education trends among the Fortune 300, Fortune Service 100, and Fortune International 100 firms. The results of the study reflect expanding corporate support for executive education, both on an in‐company basis and through university‐based programmes. The results also suggest some interesting comparisons among the executive education practices of the three survey population subgroupings.
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FAYEZ A. ELAYAN, JAMMY S.C. LAU and THOMAS O. MEYER
Incentive‐based executive compensation is regarded as a mechanism for alleviating agency problems between executives and shareholders. Seventy‐three New Zealand (NZ) listed…
Abstract
Incentive‐based executive compensation is regarded as a mechanism for alleviating agency problems between executives and shareholders. Seventy‐three New Zealand (NZ) listed companies are used to examine the relationship between executive incentive compensation schemes (ICS) and firm performance. The results suggest that neither compensation level nor adoption of an ICS are significantly related to returns to shareholders or ROA. However, there is a statistically significant relationship between Tobin's q and both CEO compensation and executive share ownership. Further, the evidence suggests the recent compensation disclosure requirements in NZ are not yet stringent enough to allow adequate analysis of the link between ICSs and corporate performance.
Robert T. Evans and Thorsten Stromback
This study explores a relatively new source of Australian executive pay information disclosed in published Annual Reports since 1989. It offers not only a different source from…
Abstract
This study explores a relatively new source of Australian executive pay information disclosed in published Annual Reports since 1989. It offers not only a different source from which to compare the results of US studies, but also an extension of the studies through the additional Australian disclosure requirements. The first section of the paper examines four possible determinants of Australian executive remuneration, accounting rates of return, firm size, industry and executive control through share holding. In the second part of the paper we used the data to analyse whether the structure of pay in Australian companies is consistent with a particular hypothesis derived from tournament theory.
Russell D. Lansbury and Annabelle Quince
Various aspects of managerial and professional employees in Australia are examined in an attempt to establish if the Australian experience is similar to that reported in other…
Abstract
Various aspects of managerial and professional employees in Australia are examined in an attempt to establish if the Australian experience is similar to that reported in other countries where “management” appears to have emerged as a third force between the employers and organised labour. It is argued that the new style manager is a younger, more highly educated “professional” but that the managerial function is also changing. A survey, conducted in Australia during 1985 of senior executives and 14 large scale organisations from both the public and private sector, provides the basis for this report of the changing characteristics of managerial and professional employees in Australia. Areas explored include the proportion of managers and professionals as a percentage of the labour force; particular characteristics which are emerging; education levels and qualifications; the process governing the movement of managers within the labour market; the effect of recent legislation on remuneration systems; and the degree of union membership among managers.
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