Fairness of CEO Compensation (eBook)

A Multi-Faceted and Multi-Cultural Framework to Structure Executive Pay

Mehtap Aldogan Eklund (Autor)

eBook Download: PDF

2019 | 1st ed. 2019
XVI, 200 Seiten
Springer International Publishing (Verlag)
978-3-030-33554-0 (ISBN)

Infos

Executive compensation and its fairness to stakeholders are topics of heated debate on platforms ranging from news forums to financial markets. This book stimulates critical thinking on executive compensation and guides academics and practitioners on the key concepts by developing a multi-faceted and multi-cultural framework. It also presents the new 'Fair CEO Compensation,' which uses a scientifically developed and structured stakeholder-based approach to reach optimal and fair CEO compensation, without capping bonuses or variable pay by rules and regulations. Financial, non-financial, organizational, strategic, cultural, personal, and social aspects are all taken into account in the framework.

In addition to implementation guidelines and real-world examples, the book presents a checklist for businesses to measure the fairness of their CEO compensation based on the suggested framework. Moreover, the author also provides a survey template to help businesses investigate their employees' perception of the fairness of their CEO's compensation.

Mehtap Aldogan Eklund is a Doctor of Philosophy in Management (Ph.D. HSG) at the University of St. Gallen (Switzerland). Her dissertation was entitled 'CEO Compensation of Listed Companies in Switzerland'. Currently, she is an Assistant Professor at the University of Wisconsin-La Crosse, USA. She is also one of the regional governance partners at the International Center for Corporate Governance (ICfCG) in St. Gallen, Switzerland. 

Previously, she worked as an Associate Professor of Accounting and Finance at the Østfold University College, Norway, between August 2017 and August 2019. She was the co-founder of the Business and Governance (BUS-GOV) and the founder of the China-Norway Researcher Network (CNRN) research centres at the Østfold University College. She also worked as a visiting Professor at the Helsinki Business School (HELBUS), Finland, and at the International School of Management (ISM), Paris, France.

Before her PhD study, she worked for seven years as an auditor in two of the Big 4 Auditing firms in Turkey, as well as in the Caribbean, the USA, and Luxembourg. Her areas of expertise are in corporate governance, executive compensation, financial accounting, international financial reporting standards (IFRS), and managerial accounting.

Inhalt

Preface 7
Acknowledgements 9
Contents 10
About the Author 12
Abbreviations 13
Chapter 1: Introduction 15
1.1 Background 15
1.2 Objectives 19
1.3 Approach 20
1.4 Limitations 20
1.5 Definition of the Terms 21
1.6 The Fair CEO Compensation Framework 24
References 28
Chapter 2: The Concept of Fair CEO Compensation 30
2.1 What Is Fairness and Fair Pay? 30
2.2 Theoretical Foundations for Executive Compensation and Fair Pay 32
2.2.1 Governance Theories 33
2.2.1.1 Managerialism or Managerial Power Theory 33
2.2.1.2 Agency Theory 33
2.2.1.3 Stewardship Theory 35
2.2.1.4 Behavioural Agency Theory (BAT) 35
2.2.1.5 Stakeholder Theory 36
2.2.2 Sociological and Ethical Theories 38
2.2.2.1 Equity Theory 38
2.2.2.2 Social Norm Theory 38
2.2.2.3 Social Comparison Theory 39
2.2.2.4 Pay Dispersion Theory 39
2.2.2.5 Upper Echelon Theory 39
2.2.2.6 Entitlement Theory and Tournament Theory 39
2.2.2.7 Business Ethics Theory 40
2.2.2.8 Virtue Ethics Theory 40
2.2.3 Schools of Thought 40
2.2.3.1 The Iron Law School 40
2.2.3.2 The School of Supply and Demand 41
2.2.3.3 The Hay Entitlement School 41
2.2.3.4 The Pay-for-Performance School 41
2.3 How Is Compensation Fairness Applied? 41
References 48
Chapter 3: Compensation for Financial Performance 51
3.1 CEO Compensation in Listed Firms 58
3.2 Trend in the Highest Compensation in Listed Companies 61
References 76
Chapter 4: Compensation for Non-financial Performance (ESG Scores) 78
References 85
Chapter 5: Compensation According to Risk of the Firm 86
References 90
Chapter 6: Compensation Not More than Peers 92
References 97
Chapter 7: Compensation According to Characteristics, Competence, and Individual Performance 100
References 106
Chapter 8: Compensation According to Strategy 109
References 113
Chapter 9: Compensation According to Culture 115
References 121
Chapter 10: Compensation According to Integration 123
References 134
Chapter 11: Practical Insights 136
11.1 Insights from Martin Hilb 136
11.2 Insights from Hermann J. Stern 138
11.3 Insights from Simon Patterson 141
11.4 Insights from Matthias Mölleney 144
11.5 Insights from Anna Sender and Alexandra Arnold 146
11.6 Insights from Alexander F. Wagner 149
11.7 Insights from Remo Schmid 152
11.8 Insights from Olof Svensson 156
References 159
Chapter 12: Conclusion, Implication, and Future Research 161
12.1 Summary and Conclusion 161
12.2 Theoretical Implications and Future Research 162
12.3 Practical Implications 164
Appendix 165
Appendix A Survey on Employees´ Perception of Fair CEO Compensation 165
Appendix B: Checklist for Fair CEO Compensation 172
Appendix C Supporting Tables 179

Produkt-Details

• Erscheint lt. Verlag: 5.12.2019
• Reihe/Serie: Contributions to Management Science
• Reihe/Serie: Contributions to Management Science
• Zusatzinfo: XVI, 200 p. 51 illus., 23 illus. in color.
• Sprache: englisch
• Themenwelt: Geisteswissenschaften ► Psychologie ► Arbeits- und Organisationspsychologie
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Personalwesen
• Schlagworte: CEO compensation in a multi-cultural framework • Checklists for compensation structure in companies • Compensation differentials between CEOs and employees • Fairness factors in CEO salaries • Intercultural differences in executive pay • Optimal CEO compensation • Pay-for-Performance analysis • Peer group effects of CEO compensation
• ISBN-10: 3-030-33554-2 / 3030335542
• ISBN-13: 978-3-030-33554-0 / 9783030335540