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Article
Publication date: 13 February 2017

Brandy Hadley

The purpose of this paper is to examine the determinants of the increase in firms’ reporting of alternative pay measures in Pay for Performance disclosures and their role…

Abstract

Purpose

The purpose of this paper is to examine the determinants of the increase in firms’ reporting of alternative pay measures in Pay for Performance disclosures and their role in subsequent Say on Pay approval.

Design/methodology/approach

This study explores the most common types of supplemental compensation disclosures used in Pay for Performance discussions using a hand-collected sample of S&P 500 proxy statements from 2012-2014. The sample compares key characteristics of firms reporting “pocketed” pay, “market-value” pay, and “peer comparison” percentile ranking pay compared to firms that do not use these alternatives.

Findings

Results suggest that firms use alternative pay measures in their Pay for Performance disclosures for different reasons. While “pocketed” pay reporters show characteristics of opportunistic disclosures and “peer comparison” reporters tend toward informative disclosure, there is often a significant positive impact of disclosing additional compensation information on Say on Pay approval when combating prior poor Say on Pay support. However, the effect seems most significant for peer comparisons, indicating the value of reporting comparative pay.

Originality/value

This study provides insights into the increasing use of alternative pay measures, and through these measures, identifies an additional mechanism of firms’ responses to Say on Pay votes. In addition, this study highlights the importance of standardized Pay for Performance disclosures to improve informativeness and comparability in financial reporting across firms. Finally, the study provides additional evidence of opportunistic disclosure by firms in order to preserve executive pay.

Details

Managerial Finance, vol. 43 no. 2
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 January 1975

Knight's Industrial Law Reports goes into a new style and format as Managerial Law This issue of KILR is restyled Managerial Law and it now appears on a continuous…

Abstract

Knight's Industrial Law Reports goes into a new style and format as Managerial Law This issue of KILR is restyled Managerial Law and it now appears on a continuous updating basis rather than as a monthly routine affair.

Details

Managerial Law, vol. 18 no. 1
Type: Research Article
ISSN: 0309-0558

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Article
Publication date: 20 March 2009

Thomas A. Hemphill and Waheeda Lillevik

The purpose of this paper is to discuss the issues surrounding “sayonpay” legislation in the USA; evaluate the corporate governance alternatives to “sayonpay”…

Abstract

Purpose

The purpose of this paper is to discuss the issues surrounding “sayonpay” legislation in the USA; evaluate the corporate governance alternatives to “sayonpay” legislation; recommend a policy encouraging enhanced executive accountability; and suggest research questions pertaining to “sayonpay” proposals and executive compensation for scholars to pursue.

Design/methodology/approach

The paper takes an exploratory approach to discussing and analyzing the issues surrounding “sayonpay” legislation in the USA and offering an alternative corporate governance approach to enhancing executive performance.

Findings

The paper finds that whether an annual non‐binding “sayonpay” policy is instituted or not within a company is not the crux of the executive compensation issue. What is important is whether concerned shareholders have the ability to have proxy access and successfully pass such a resolution, thereby exercising shareholder pressure on the board of directors to implement a corporate policy of equating appropriate executive compensation with managerial performance. Moreover, this improvement in board‐shareowner engagement, along with expanded disclosure of executive compensation packages, will assist in obviating the need for the exercise of a draconian shareholder resolution to remove directors.

Originality/value

This paper offers an in‐depth review of the “sayonpay” legislative and corporate governance controversy; places the issue in the context of effective corporate governance; recommends a reasoned approach to executive compensation accountability; and offers a list of research questions for corporate governance and human resource management scholars to pursue.

Details

International Journal of Law and Management, vol. 51 no. 2
Type: Research Article
ISSN: 1754-243X

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Book part
Publication date: 13 October 2017

Anne Lafarre

In this chapter, we explore the legal framework of AGMs in seven Member States (Austria, Belgium, Germany, France, Ireland, the Netherlands, and the United Kingdom) of…

Abstract

In this chapter, we explore the legal framework of AGMs in seven Member States (Austria, Belgium, Germany, France, Ireland, the Netherlands, and the United Kingdom) of shareholder decision-making rights. We find that, since only a small part of the decision-making rights is harmonized at the European level, there are numerous differences in shareholder rights among national laws. These decision-making rights are usually about the topics director (re-)elections, pay matters, share capital, amendments to articles of association, annual accounts, etc. To be able to conduct empirical research in the remaining chapters, we develop a categorization framework of 15 voting items.

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Article
Publication date: 7 September 2020

J. Samuel Baixauli-Soler, Gabriel Lozano-Reina and Gregorio Sánchez-Marín

The 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…

Abstract

Purpose

The 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/approach

This 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).

Findings

Results 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/value

This 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.

Details

Management Decision, vol. 59 no. 6
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 5 February 2018

Haiyan Jiang and Honghui Zhang

The purpose of this paper is to investigate whether regulatory restriction on executive compensation in Chinese state-owned enterprises is beneficial to firm performance…

Abstract

Purpose

The purpose of this paper is to investigate whether regulatory restriction on executive compensation in Chinese state-owned enterprises is beneficial to firm performance. The authors also examine the role of monitoring mechanisms in offsetting the effect of compensation restriction.

Design/methodology/approach

Multivariate analysis is conducted using archival data from Chinese listed companies over the period of 2007-2014.

Findings

The findings show that the restriction on executive compensation is negatively associated with a firm’s accounting performance, and this negative effect is ameliorated in firms with good internal control and a high level of institutional shareholding. Additional analysis reveals that the negative effect of pay restriction on firm performance is more pronounced in central government-controlled listed SOEs than in those controlled by local government.

Originality/value

This study is the first to investigate a government’s say-on-pay policy. Specifically, the findings pinpoint the inefficacy of regulatory intervention in corporate executive compensation. The findings add to compensation literature using China’s unique institutional setting.

Details

Asian Review of Accounting, vol. 26 no. 1
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 7 October 2019

Ernestine Gheyoh Ndzi

The paper aims to examine the role of human greed in the determination of executive remuneration in the UK.

Abstract

Purpose

The paper aims to examine the role of human greed in the determination of executive remuneration in the UK.

Design/methodology/approach

The paper reviews the past and existing regulation and corporate governance recommendations on executive remuneration.

Findings

The paper demonstrates that the failure of regulatory mechanisms to curb excessive executive remuneration can be justified on the grounds of human greed. Greed is facilitated by the potential conflict of interest that exists as a result of the executives’ position in the company. The position of the law has given greed the opportunity to manifest, making it quite difficult for executive remuneration to be effectively regulated.

Originality/value

The paper adds to the existing debate on excessive executive remuneration by demonstrating that human greed is the basis of excessive executive remuneration on which limited literature exists.

Details

Journal of Financial Crime, vol. 26 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 9 April 2018

James P. Walsh, B. Joseph White and Jeffrey R. Edwards

This paper contains a commentary on the paper by Aguinis, Martin, Gomez-Mejia, O’Boyle and Joo published in this same issue. This paper aims to encourage the readers to…

Abstract

Purpose

This paper contains a commentary on the paper by Aguinis, Martin, Gomez-Mejia, O’Boyle and Joo published in this same issue. This paper aims to encourage the readers to examine this novel insight in future research but sadly, to disregard the results of this particular investigation.

Design/methodology/approach

Google Scholar tells us that, over a quarter of a million studies examine the relationship between CEO compensation and firm performance. Aguinis et al. (2018) take much of that work to task. Observing that the distribution of CEO compensation is skewed, they question any work that assumes a normal distribution. Correcting the flaw, Aguinis et al. (2018) conduct their own investigation of this important relationship. Contrary to previous work, they find no consistent empirical relationship between pay and performance. The authors review and discuss their work with a clear eye on its implications for improving our understanding of these relationships.

Findings

The authors cannot accept the results of the Aguinis et al. (2018) investigation as it stands. Saying why, they close their commentary with some ideas that should help one understand whether accounting for a skewed CEO pay distribution really does revolutionize one’s understanding of corporate governance.

Practical implications

The statistical insight provided by Aguinis et al. (2018) yields provocative, if not profound, practical implications. While the authors’ review is critical, they aim to foster continued inquiry, not shut it down.

Objetivo

El objetivo del presente comentario del articulo de Aguinis, Martin, Gomez-Mejia, O’Boyle and Joo (publicado en este mismo número) es el de motivar a sus lectores a examinar la nueva intuición que proporciona en el futuro pero, tristemente, desestimar los resultados de este trabajo en concreto.

Diseño/metodología/aproximación – Google Scholar indica que hay más de un cuarto de millón de estudios que analizan la relación entre la retribución del CEO y los resultados empresariales. Aguinis et al., (2018) analizan gran parte de este trabajo. Tras observar que la distribución de la retribución del CEO es asimétrica, cuestionan cualquier trabajo que asuma una distribución normal. Corriendo este aspectos Aguinis et al. (2018) llevan a cabo su propio análisis en este importante tema. Contrariamente a otros trabajos previos estos autores no encuentran una relación consistente entre la retribución y los resultados. Revisamos y discutimos su trabajo con un ojo en las implicaciones para la comprensión de esta relación.

Resultados – No podemos aceptar los resultados de Aguinis et al. (2018) en su forma actual. Señalando porqué, cerramos nuestro comentario con algunas ideas que deben ayudarnos a entender si tomando en cuenta la asimetría de la distribución de la retribución del CEO realmente es una revolución para nuestra comprensión del gobierno corporativo de las empresas.

Implicaciones – La evidencia aportada por Aguinis et al. (2018) genera provocadoras, si no profundas, implicaciones prácticas. Si bien nuestro comentario es crítico, es nuestro deseo abrir – y no cerrar – el debate para considerar este importante tema.

Originalidad/valor – El comentario revisa de manera crítica las conclusiones del artículo publicado por Aguinis y colegas en este mismo número.

Objetivo

O objetivo do presente comentário do artigo de Aguinis, Martin, Gomez-Mejia, O’Boyle e Joo (publicado neste mesmo número) é motivar aos seus leitores a examinar a nova intuição que proporciona no futuro mas, infelizmente, desestimar os resultados deste trabalho em concreto.

Metodologia – O Google Scholar diz-nos que mais de duzentos e cinquenta mil estudos examinam a relação entre compensação do CEO e performance da empresa. Aguinis et al. (2018) examinam uma boa parte desses estudos. Observando que a distribuição da compensação do CEO é enviesada, eles questionam os trabalhos que assumem uma distribuição normal. Corrigindo a falha, Aguinis et al. (2018) conduzem a sua própria investigação desta relação. Contrariamente a trabalho anterior, eles não encontram uma relação empírica consistente entre pagamento e performance. Revemos e discutimos o seu trabalho com enfoque especial nas suas implicações para a compreensão destas relações.

Resultados – Não podemos aceitar os resultados da investigação de Aguinis et al. (2018) tal como está. Dizendo porquê, terminamos o nosso comentário com algumas ideias que nos ajudam a perceber se dar conta duma distribuição enviesada de compensação do CEO realmente revoluciona a nossa compreensão da governança corporativa.

Implicações – A evidência estatística de Aguinis et al. (2018) levanta implicações práticas provocadoras, se não mesmo profundas. Sendo a nossa revisão crítica, pretendemos abrir – e não fechar – a continuação da consideração destes assuntos.

Originalidade/valor – O comentário faz uma revisão crítica das conclusões do artigo de Aguinis e colegas, neste número.

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Book part
Publication date: 13 October 2017

Anne Lafarre

In this chapter, we assess shareholder voting behaviour in our sample of seven European Member States. We consider the AGM’s agenda, shareholder proposals, rejected voting…

Abstract

In this chapter, we assess shareholder voting behaviour in our sample of seven European Member States. We consider the AGM’s agenda, shareholder proposals, rejected voting items and dissent rates. Our research shows, inter alia, that certain voting items receive higher dissent rates than others. These are, for instance, director elections and say-on-pay resolutions. Other voting items, such as the approval of the annual accounts, are merely a formality.

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Book part
Publication date: 2 March 2011

Douglas Sikorski

This chapter analyses the causes and effects of the financial crisis that commenced in 2008, and it examines the dramatic government rescues and reforms. The outcomes of…

Abstract

This chapter analyses the causes and effects of the financial crisis that commenced in 2008, and it examines the dramatic government rescues and reforms. The outcomes of this, the most severe collapse to befall the United States and the global economy for three-quarters of a century, are still unfolding. Banks, homeowners and industries stood to benefit from government intervention, particularly the huge infusion of taxpayer funds, but their future is uncertain. Instead of extending vital credit, banks simply kept the capital to cover other firm needs (including bonuses for executives). Industry in the prevailing slack economy was not actively seeking investment opportunities and credit expansion. The property and job markets languished behind securities market recovery. It all has been disheartening and scary – rage against those in charge fuelled gloom and cynicism. Immense private debt was a precursor, but public debt is the legacy we must resolve in the future.

Details

The Impact of the Global Financial Crisis on Emerging Financial Markets
Type: Book
ISBN: 978-0-85724-754-4

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