Top executive compensation: Equity or excess? Implications for regaining American competitiveness

The debate over compensation packages for top executives is discussed. Particular emphasis is placed on the decoupling of CEO pay and organizational performance. A contrast is drawn between firms that are owner-controlled and those that are manager-controlled. Owner-controlled firms tend to be more market-driven. In manager-controlled firms, however, ownership can become diluted to the point where decisions may not always be in the best interest of shareholders. The process of determining CEO compensation packages is examined, and special attention is given to the handling of stock options. In order to stem the threat of increased government intervention, suggestions are made for increasing the leverage of compensation committees and of shareholders in general.Bruce Walters is a doctoral candidate and research/teaching assistant in the department of management at the University of Texas at Arlington, with emphasis in business policy and strategic management.Tim Hardin is a graduate student in the department of urban affairs at the University of Texas at Arlington, with emphasis in urban management.James Schick is a summa cum laude graduate of the department of finance at the University of Texas at Arlington.     

The political determinants of executive compensation: Evidence from an emerging economy

In regulated economies, corporate governance mechanisms such as executive compensation are less driven by market-based forces but more subject to political influence. We study the political determinants of executive compensation for all listed Chinese firms in the context of an exogenous shock that removed market frictions in share-tradability. Under strong political constraints, state ownership reduced the managerial pay levels and increased pay-for-performance sensitivity (to asset-based benchmarks). Board independence and compensation committees do not curb managerial pay, and market-based factors do not have a significant influence. However, these effects reversed following the governance shock (removal of market frictions in share tradability).     

Gender differences in executive compensation: Variation with board gender composition and time

This paper uses EXECUCOMP, COMPUSTAT and Investor's Responsibility Resource Center data to examine gender differences in executive salaries and total compensation from 1996 to 2004. We find that the salaries of female executives are about 5 percent lower than those of male executives, controlling for executive, firm, and board characteristics, and that the gap exists primarily in the lower officer ranks, where women are relatively highly concentrated. The gender difference in salary is larger in firms with more male-dominated boards; perhaps not coincidentally, such firms are also found to have fewer female executives in top managerial positions as well as lower probabilities of having any top female executives at all. The results of Oaxaca wage decompositions suggest that, although the magnitude of the gender difference decreases slightly over the sample period, the share of the gender difference that is due to unobserved factors remains basically steady or even increases. Thus, although women have become better represented in top executive jobs in recent decades, their relative salaries remain below those of men, possibly due in part to governance structures that remain male-dominated.     

Corporate boards,large blockholders and executive compensation in banks: Evidence from Poland

The paper aims to investigate the impact of uniform board governance standards on the level of executive pay in banks with a controlling shareholder. Based on the sample of a hand-collected data on all executive pay of all public banks in Poland from 2005 to 2013, we find that board independence is negatively associated with executive compensation. In contrast to widely-held banks, independent directors in banks controlled by a blockholder provide restraint on the tendency to overcompensate. Thus, in concentrated ownership structure managerial power theory prevails over agency theory. However, the effect might be diluted as the number of board members increases.     

The American executive and Colombian violence: Social relatedness and business ethics

Three models of the response of American managers both to the violence of Colombian society and to the demands made by the Colombian narcotrafficker are identified: (1) conflict, (2) compartment, and (3) complementarity. The foundations of the models and their managerial consequences are decribed. Finally, the concepts underlying complementarity lead to social relatedness, both a new model of the business and society relationship and a guide for business ethics.John Barnett, associate professor of business administration at the University of New Hampshire, combines an industrial background as a management consultant and as a venture capitalist with a career as a business educator. He is a certified public accountant and a co-founder of Corroboree, a center for self-learning through service and study.     

The role of ethics in executive compensation: Toward a contractarian interpretation of the neoclassical theory of managerial renumeration

The topic of Chief Executive Officer (CEO) compensation has been a focus of interest for many years. The purpose of this article is to explore the ethical dimensions of various generally accepted theories of CEO renumeration. We argue that a contractarian approach, based on the Kantian ethical framework, can be used to augment the existing contingent pay models.While the neoclassical economic model of the firm views the maximization of the shareholders' wealth as the sole responsibility of top management, a contractarian approach regards the balancing of various stakeholders' interests as the primary task of top management. Ethical problems emerge when there are divergent, yet equally justifiable interests which compete in order to channel organizational resources to meet their own needs. In this situation, given the inherent ambiguities and ever present possibilities of multiple perspectives, it may not always be feasible to provide a categorical answer to the question of whether the CEO's decisions are ethical. We suggest that a broad interpretation of the neoclassical theory of the firm, one that is grounded in Kantian and contractarian ethics, can serve as a basis for a reconciliation of different theories of executive compensation.Linda L. Carr, a certified public accountant, has held positions as an auditor in public accounting and as a controller in industry. Her thesis examines the determinants of executive compensation in large and small firms.Moosa Valinezhad is assistant professor of economics in Western Kentucky University, where he teaches international economics, microeconomics, and statistics. Dr. Valinezhad has a deep interest in the interdisciplinary aspects of economics. His recent article in theJournal of Economic Issues explores the importance of sociopolitical forces for the monetary approach to the balance of payment.     

Justice in compensation: a defense

Business ethicists have written much about ethical issues in employment. Except for a handful of articles on the very high pay of chief executive officers and the very low pay of workers in overseas sweatshops, however, little has been written about the ethics of compensation. This is prima facie strange. Workers care about their pay, and they think about it in normative terms. This article's purpose is to consider whether business ethicists' neglect of the normative aspects of compensation is justified. I examine several possible justifications for neglecting compensation and show that they fail. What remains is a case for thinking that it is worthy of normative analysis.     

A tale of two deficits: an empirical investigation for canada

This article purports to explain the current account behavior for Canada in the context of the twin-deficit hypothesis. The study tests the validity of the hypothesis in a model in which domestic savings and investment are explicitly considered. In this article we use the cointegration analysis to investigate the secular relationship between the fiscal and current account deficits. We also estimate an error correction model to capture the short-run dynamics of the relationship. A major finding of this study is that the current account deficit seems to be related both to the fiscal deficit and the savings—investment gap.     

Sexual-harassment policies for the workplace: A tale of two companies

To avoid liability and legal costs, retain talented people, and preserve customers' goodwill, a company must have in place a carefully devised policy for dealing with sexual-harassment claims.     

Evaluating the effects of executive learning and development on organisational performance: implications for developing senior manager and executive capabilities

In spite of decades of research into high‐performance work systems, very few studies have examined the relationship between executive learning and development and organisational performance. In an attempt to close this gap, this study explores the effects of a validated four‐dimensional executive learning and development measure on a composite measure of organisational performance. The study is based on ordinal regression analysis with empirical data elicited from 222 executives and senior leaders drawn from a wide geographic region. The theoretical link theoretical between the two variables was established by building on the Activity‐Motivation‐Outcome concept in order to encapsulate human capital, dynamic capability, resource dependency, social exchange and leader‐member‐exchange theories. The study reported an overall positive effect of executive learning and development on firm performance and has significant implications for the effective development of executive and senior management capabilities as a means of improving organisational effectiveness.     

Designing a global compensation system: The logic and a model

Increased emphasis on multinational trade and the growth of foreign subsidiaries of United States based corporations has heightened the need for managers in foreign countries. Development of a comprehensive global compensation system for expatriates, foreign nationals and third country foreign nationals is one of the most important issues facing international human resource management. This article presents a compensation model that examines the internal/external environments that affect the managers' expectations and ultimate satisfaction with their international compensation packages.     

A tale of passion: New insights into entrepreneurship from a parenthood metaphor

While most organizational theories avoid emotion, many entrepreneurs act with emotion. Entrepreneurs often describe their businesses as their “babies,” expressing personal connection and even identification with their businesses. We therefore suggest that through exploring associated relational metaphors, we can gain additional insight into entrepreneurship. Specifically, we propose that parenting, with its nurturance, passion, or even neglect or abuse, offers a particularly fruitful metaphor for examining entrepreneurship that may better resonate with entrepreneurs themselves than does current theory. We examine various aspects of the progression of children and ventures, including nascent forms of entrepreneurship (gestation of babies), emergence, and postemergence activities, and highlight the ideas of passion, identification, attachment, and entrepreneurial context.     

Assessing Marketing Performance: Reasons for Metrics Selection

In recent years both practitioners and academics have shown an increasing interest in the assessment of marketing performance. This paper explores the metrics that firms select and some reasons for those choices. Our data are drawn from two UK studies. The first reports practitioner usage by the main metrics categories (consumer behaviour and intermediate, trade customer, competitor, accounting and innovativeness). The second considers which individual metrics are seen as the most important and whether that differs by sector. The role of brand equity in performance assessment and top management orientations are key considerations. We found consistency between orientation and metrics. Within these categories we identified 19 metrics that could be regarded as primary and could therefore serve as a short-list for initial selection. However, the sector importantly moderates that selection, not least because competitive benchmarking requires similar metrics to be available. Control, orientation and institutional theories appeared to influence metrics selection and the absence of agency theory is probably due to the research method of this paper. We concluded with some propositions formally to test the basis of metrics selection.