{"title":"A Green Light to Executive Pay: Institutional Monitors and Pay Sensitivity to Carbon Performance","authors":"Danial Hemmings, Lynn Hodgkinson, Gwion Williams","doi":"10.1111/1467-8551.70004","DOIUrl":null,"url":null,"abstract":"<p>We test for relations among executive compensation premia and firm carbon performance under varying degrees of institutional investor monitoring. Using US data for 2010–2023 (15,836 firm-years), we find that low carbon emissions firms remunerate more excessively than high emitters, indicating greater rent extraction. Excess pay to carbon performance sensitivity relates non-linearly to institutional investors’ ownership. Although outside monitors initially discipline against overcompensating managers, carbon performance leads to more excessive pay when powerful institutional blockholders hold a controlling stake. Drawing on agency and institutional perspectives, we assert that pressure on US firms and financial institutions to decarbonize has benefitted managers of low emitting firms with a relatively stronger hand in pay bargaining.</p>","PeriodicalId":48342,"journal":{"name":"British Journal of Management","volume":"37 1","pages":""},"PeriodicalIF":5.7000,"publicationDate":"2025-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/1467-8551.70004","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"British Journal of Management","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/1467-8551.70004","RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
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Abstract
We test for relations among executive compensation premia and firm carbon performance under varying degrees of institutional investor monitoring. Using US data for 2010–2023 (15,836 firm-years), we find that low carbon emissions firms remunerate more excessively than high emitters, indicating greater rent extraction. Excess pay to carbon performance sensitivity relates non-linearly to institutional investors’ ownership. Although outside monitors initially discipline against overcompensating managers, carbon performance leads to more excessive pay when powerful institutional blockholders hold a controlling stake. Drawing on agency and institutional perspectives, we assert that pressure on US firms and financial institutions to decarbonize has benefitted managers of low emitting firms with a relatively stronger hand in pay bargaining.
期刊介绍：
The British Journal of Management provides a valuable outlet for research and scholarship on management-orientated themes and topics. It publishes articles of a multi-disciplinary and interdisciplinary nature as well as empirical research from within traditional disciplines and managerial functions. With contributions from around the globe, the journal includes articles across the full range of business and management disciplines. A subscription to British Journal of Management includes International Journal of Management Reviews, also published on behalf of the British Academy of Management.
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