CEO's Share of Top-Management Compensation, Characteristics of the Board of Directors and Firm-Value Creation
Notice bibliographique
Résumé
INTRODUCTION The media attention concerning the compensation received by Chief Executive Officers (CEOs) has increased in the past two decades due to the growing gap vis-a-vis the middle class income (Abma, 2012; Anderson el al., 2004), the financial scandals in the wake of the recent global crisis, and the Occupy Wall Street movement (Sharma & Huang, 2010). In terms of corporate governance, CEO compensation is ultimately the board's responsibility. The board of directors, by determining CEO compensation, contributes to establish the company's compensation structure, especially by setting the gap between CEO compensation and that of the other company executives. Therefore, we pose ourselves the first research question, which is formulated as follows: Can board characteristics partially explain the CEO pay slice (CPS), i.e. the CEO's share of the combined remuneration of the five top-paid executives. The board characteristics which are studied in our article are independence, size, total director compensation, stock-based director compensation, director stock ownership, directors' average number of tenure years on the board and the CEO's dual position as Chairman of the Board. Another research question is connected with the impact that a greater CPS may have on firm market-valuation. Two theoretical views have been proposed to address this question. The tournament theory, which was initially formulated by Lazear and Rosen (1981), sustains that the compensation gap between the CEO and other executives, could be a source of motivation for the latter. This enhanced motivation could create company value. The fair-wage view, on the contrary, claims that the increased competition among the members of the executive team could be detrimental to cooperation, which in turn would be harmful for the company (Pfeffer, 1995; Deusch, 1985; Levine, 1991). If a greater CPS is a source of value creation, our study will support the tournament theory, whereas a negative link between CPS and firm value will upheld the fairwage theory. This study makes a unique contribution to the academic literature. To the best of the authors' knowledge, it is the first to examine if board characteristics are determinants of CPS and if the latter can be a driver of the company's market value. The study addresses this question in the context of Canadian capital markets. Specifically, it examines the research questions using as a sample the constituent firms of the S&P/TSX 60 index, which are the largest public Canadian companies. The results indicate that CPS is positively related to the independence of the board of directors and negatively linked to director stock ownership. The largest CPS, where the greatest proportion of the board is independent, could be explained by the larger dependence to the CEO as a link to the company. The negative relationship observed for director stock ownership could be explained by tighter controls on CEO compensation by the directors having more common interests with shareholders. Results also that PRPDG has a positive effect on company market value, which agrees with tournament theory. The following sections will successively present the literature review and the formulation of hypotheses, the methodology and sample, and the results and the conclusion. II. LITERATURE REVIEW AND STATEMENT OF HYPOTHESES 2.1. The Theory The compensation-performance relationship has been the object of several studies that attempted to analyze the legitimacy of awarded salaries and its links with performance. The effects on firm performance of actions advanced by executives were frequently correlated with their compensation. In particular, wage dispersion seems to have an impact on the effort made by the worker, and therefore the performance of the company. The Tournament Theory, put forward by Lazear and Rosen (1981), refers to the idea that wage dispersion enhances worker motivation. …
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Comment cette classification a été obtenuedéplier
Prédiction machine sur la base complète
Imitation des enseignantsNi prévalence calibrée, ni vérité terrain. Validation humaine à venir. Le volet Gemma est une étiquette directe du modèle pour chaque travail de la base, lue sur la notice réduite au titre. Le volet Codex est un classifieur appris des 10 348 étiquettes directes de Codex et calibré sur les taux pondérés de l'échantillon; les champs sans appui suffisant ne portent aucun appel Codex. Le mode candidate est l'union des deux volets; le consensus est leur intersection. Ces sorties portent le statut machine_predicted_unvalidated et ne sont pas des étiquettes humaines.
Scores du classifieur distillé par catégorie (deux têtes)
| Catégorie | Codex | Gemma |
|---|---|---|
| Métarecherche | 0,001 | 0,005 |
| Méta-épidémiologie (sens strict) | 0,000 | 0,000 |
| Méta-épidémiologie (sens large) | 0,000 | 0,000 |
| Bibliométrie | 0,001 | 0,001 |
| Études des sciences et des technologies | 0,000 | 0,001 |
| Communication savante | 0,002 | 0,001 |
| Science ouverte | 0,001 | 0,001 |
| Intégrité de la recherche | 0,001 | 0,000 |
| Charge utile insuffisante (le modèle a refusé de juger) | 0,017 | 0,001 |
Scores machine (provisoires)
Les deux têtes enseignantes du modèle étudiant, lues sur ce travail. Un score ordonne la base pour la relecture; il n'affirme jamais une catégorie, et le statut de validation accompagne chaque rangée tel quel.
Scores de référence d'un modèle non mature (critères de maturité non atteints, 7 itérations). Un score ordonne; il n'affirme jamais une catégorie.
score_only:v0-immature-baseline · tel quel depuis la passe de notation : score_only signifie que le nombre peut ordonner les travaux, et qu'aucune étiquette de catégorie n'en découleClassification
machine, non validéePrédiction automatique; un appel candidat d’une seule source (Gemma direct ou Codex distillé), pas un consensus.
Le détail, modèle par modèle et score par score, se trouve en fin de page sous « Comment cette classification a été obtenue ».