The impact of remuneration governance on chief executive officer overpayment

IF 1.2 4区管理学 Q3 ECONOMICS

South African Journal of Economic and Management Sciences Pub Date : 2023-03-17 DOI:10.4102/sajems.v26i1.4860

M. Bussin, Albert Wöcke, Benno Deysel

{"title":"The impact of remuneration governance on chief executive officer overpayment","authors":"M. Bussin, Albert Wöcke, Benno Deysel","doi":"10.4102/sajems.v26i1.4860","DOIUrl":null,"url":null,"abstract":"Background: Chief executive officer (CEO) payment and company performance are highly controversial, and existing research has focused on this link for decades. The study was conducted in South Africa where corporate governance regulators have introduced measures to improve the relationship between CEO pay and performance.Aim: This research aimed to explore the problem by extending Pepper and Gore’s (2015) behavioural agency theory to examine the moderating effect of remuneration governance on the CEO pay – company performance relationship.Setting: The study focused on the Top 100 listed companies in which several regulations concerning CEO pay were introduced, which provided the opportunity to examine such regulations on the alignment of CEO pay and company performance.Method: Panel data from 67 company annual reports were analysed over two decades with 871 datapoints, divided into three periods corresponding with the introduction of regulations. Analyses included corrected panel standard errors and estimated generalised least squared hierarchical multiple regression and moderated multiple regression analyses.Results: Results showed a statistically significant positive relationship between company performance measures and total CEO remuneration (including long-term incentives [LTIs]) for each of the three periods. We found that LTIs tied to performance-vested criteria and CEO minimum shareholding do enhance pay-performance sensitivity. Results further suggest that the behavioural agency theory is incomplete and researchers should consider the role of remuneration governance in moderating CEO overpayment.Conclusion: Remuneration governance should be refined through the inclusion of retrospective CEO remuneration disclosure to increase pay-performance sensitivity.Contribution: This research contributes to knowledge of CEO payment and company performance.","PeriodicalId":46244,"journal":{"name":"South African Journal of Economic and Management Sciences","volume":"48 1","pages":""},"PeriodicalIF":1.2000,"publicationDate":"2023-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"South African Journal of Economic and Management Sciences","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.4102/sajems.v26i1.4860","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}

引用次数: 1

Abstract

Background: Chief executive officer (CEO) payment and company performance are highly controversial, and existing research has focused on this link for decades. The study was conducted in South Africa where corporate governance regulators have introduced measures to improve the relationship between CEO pay and performance.Aim: This research aimed to explore the problem by extending Pepper and Gore’s (2015) behavioural agency theory to examine the moderating effect of remuneration governance on the CEO pay – company performance relationship.Setting: The study focused on the Top 100 listed companies in which several regulations concerning CEO pay were introduced, which provided the opportunity to examine such regulations on the alignment of CEO pay and company performance.Method: Panel data from 67 company annual reports were analysed over two decades with 871 datapoints, divided into three periods corresponding with the introduction of regulations. Analyses included corrected panel standard errors and estimated generalised least squared hierarchical multiple regression and moderated multiple regression analyses.Results: Results showed a statistically significant positive relationship between company performance measures and total CEO remuneration (including long-term incentives [LTIs]) for each of the three periods. We found that LTIs tied to performance-vested criteria and CEO minimum shareholding do enhance pay-performance sensitivity. Results further suggest that the behavioural agency theory is incomplete and researchers should consider the role of remuneration governance in moderating CEO overpayment.Conclusion: Remuneration governance should be refined through the inclusion of retrospective CEO remuneration disclosure to increase pay-performance sensitivity.Contribution: This research contributes to knowledge of CEO payment and company performance.

查看原文本刊更多论文

薪酬治理对首席执行官超额薪酬的影响

背景:首席执行官(CEO)薪酬与公司绩效是一个极具争议的问题，现有的研究几十年来一直关注这一联系。这项研究是在南非进行的，那里的公司治理监管机构已经引入了改善首席执行官薪酬与业绩之间关系的措施。目的:本研究旨在通过扩展Pepper和Gore(2015)的行为代理理论来探讨薪酬治理对CEO薪酬-公司绩效关系的调节作用。背景:本研究以排名前100的上市公司为研究对象，在这些公司中引入了一些关于CEO薪酬的规定，这为研究这些规定对CEO薪酬与公司绩效的一致性提供了机会。方法:对67家公司年报的面板数据进行分析，分析了20多年来871个数据点，将其分为三个时期，与法规的出台相对应。分析包括修正的面板标准误差和估计的广义最小二乘分层多元回归和适度多元回归分析。结果:结果显示，公司绩效指标与CEO总薪酬(包括长期激励[LTIs])之间存在统计学上显著的正相关关系。我们发现，与绩效授予标准和CEO最低持股挂钩的lti确实增强了薪酬绩效敏感性。研究结果进一步表明，行为代理理论是不完整的，研究人员应该考虑薪酬治理在调节CEO超额薪酬中的作用。结论:应通过纳入CEO薪酬追溯披露来完善薪酬治理，提高薪酬绩效敏感性。贡献:本研究对CEO薪酬与公司绩效的认识有所贡献。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

South African Journal of Economic and Management Sciences Multiple-

CiteScore

2.30

自引率

9.10%

发文量

审稿时长

52 weeks

期刊介绍： The South African Journal of Economic and Management Sciences (SAJEMS) is a leading South African-based publication for interdisciplinary research in the economic and management sciences. The journal publishes and disseminates high-quality academic articles that contribute to the better understanding of the interaction between economic, environmental and social perspectives as applicable to the broader management sciences in an African environment. The editorial board therefore invites authors to submit their research from areas such as economics, finance, accounting, human capital, marketing and other related disciplines that break down common intellectual silos and prepares a new path for debate on the operation and development of sustainable markets and organisations as relevant to the broader African context.