TY - JOUR
T1 - Executive remuneration standards and the “conformity gap” at controlled corporations
AU - Barontini, Roberto
AU - Bozzi, Stefano
AU - Ferrarini, Guido
PY - 2016
Y1 - 2016
N2 - In this paper we analyze the relationship between conformity to executive
remuneration standards, corporate ownership, and the level and structure of
CEO compensation for large European listed companies in the years 2007
and 2010. We show that controlled corporations conform to executive
remuneration standards less than widely held firms. We also show that
weaker compliance is associated with lower CEO pay and more cash-based
incentive structures. We interpret this “conformity gap” from the perspective
of individual firms and from a societal perspective, with the aim to contribute
to frame the policy questions concerning executive pay at controlled
corporations. Different policy implications depend on whether the conformity
gap reflects a lower need for managerial incentives, given the monitoring by
controlling shareholders, or the latter’s willingness to extract private benefits
of control. We argue in this paper that the former hypothesis prevails, so that
regulators should abstain from increasing the level of enforcement of
executive remuneration standards.
AB - In this paper we analyze the relationship between conformity to executive
remuneration standards, corporate ownership, and the level and structure of
CEO compensation for large European listed companies in the years 2007
and 2010. We show that controlled corporations conform to executive
remuneration standards less than widely held firms. We also show that
weaker compliance is associated with lower CEO pay and more cash-based
incentive structures. We interpret this “conformity gap” from the perspective
of individual firms and from a societal perspective, with the aim to contribute
to frame the policy questions concerning executive pay at controlled
corporations. Different policy implications depend on whether the conformity
gap reflects a lower need for managerial incentives, given the monitoring by
controlling shareholders, or the latter’s willingness to extract private benefits
of control. We argue in this paper that the former hypothesis prevails, so that
regulators should abstain from increasing the level of enforcement of
executive remuneration standards.
KW - Agency theory
KW - Compliance
KW - Controlling shareholders
KW - Corporate governance codes
KW - Executive remuneration
KW - Private benefits of control
KW - Agency theory
KW - Compliance
KW - Controlling shareholders
KW - Corporate governance codes
KW - Executive remuneration
KW - Private benefits of control
UR - http://hdl.handle.net/10807/91089
U2 - 10.1007/s10997-016-9366-0
DO - 10.1007/s10997-016-9366-0
M3 - Article
SN - 1385-3457
SP - N/A-N/A
JO - THE JOURNAL OF MANAGEMENT AND GOVERNANCE
JF - THE JOURNAL OF MANAGEMENT AND GOVERNANCE
ER -