Managerial control, performance, and executive compensation

Article Abstract:

A survey of the 71 manufacturing firms selected by Business Week magazine to comprise Standard and Poor's COMPUSTAT group indicates that: when top executives are employed by externally controlled firms, their salary levels reflect performance but not operation size; and executives who work for stockholder-controlled corporations receive salaries commensurate with operation size that seldom reflect performance levels. These observations are reflected not only in salary levels achieved, but also in rates of salary increases over specified study periods. Perhaps the stockholder-controlled companies pay executives based upon size of firm (or size of operation), because stockholders normally view their firms as investments.

Management science, Manufacturing industry, Manufacturing industries, Surveys, Chief executive officers, Powers and duties, Executive ability, Corporate officers

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Managerial compensation and firm performance: a general research framework

Article Abstract:

A tremendous amount of research has explored the relationship between managerial pay and firm performance. We argue that this research has generally been limited because it ignores other criteria that can be used to determine managerial pay, as well as the influence of a firm's governance structure and various contingencies. Our analysis leads to a general framework for research on executive pay. This framework is used to evaluate the present state of research in this field and the contribution of the six papers in this special research forum, and to identify directions for further research. (Reprinted by permission of the publisher.)

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Board control, remuneration committees, and top management compensation

Article Abstract:

Using panel data on large, publicly traded U.K. companies gathered between 1991 and 1994, we examined the role of board control and remuneration committees in determining management compensation. Board monitoring, measured in terms of the proportion of nonexecutive directors on a board and the presence of remuneration committees and CEO duality, had only a limited effect on the level of top management pay. An important conclusion was that top management pay and corporate performance are more aligned in companies with outsider-dominated boards and remuneration committees. (Reprinted by permission of the publisher.)

Corporate directors

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