Does One Size Fit All? Investigating Pay–Future Performance Relationships Over the 'Seasons' of CEO Tenure
| Autor: | Maria Goranova, Richard L. Priem, Wanrong Hou |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
050208 finance
Executive compensation ComputingMilieux_THECOMPUTINGPROFESSION business.industry Strategy and Management Compensation (psychology) Best practice 05 social sciences ComputingMilieux_LEGALASPECTSOFCOMPUTING Accounting Sample (statistics) Incentive Shareholder 0502 economics and business Normative Business Salary 050203 business & management Finance |
| Zdroj: | Journal of Management. 43:864-891 |
| ISSN: | 1557-1211 0149-2063 |
| DOI: | 10.1177/0149206314544744 |
| Popis: | Boards of directors must navigate between adopting standardized “best practices” for their CEOs’ pay plans, on the one hand, and customizing their CEOs’ pay to align their particular CEO’s goals with those of shareholders, on the other. We build theory proposing that the incentive effects of different CEO compensation types vary consistently over CEO tenures and, therefore, that overstandardization of CEO pay plans actually can hurt shareholders. Our analysis of a sample of U.S. Standard & Poor’s 500 firms from 1998 to 2005 shows declining benefits to shareholders from performance-based compensation (i.e., options and bonuses) as CEO tenure increases but an opposite effect for non-performance-based (i.e., salary) pay. These findings can be considered a preliminary warning that normative “best practices” should not become the exclusive approach to determining CEO pay packages; instead, boards should consider more holistic approaches that incorporate the fit between CEO characteristics and organizational goals. |
| Databáze: | OpenAIRE |
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