Artikel
Institutional shareholding as a corporate governance mechanism that drives Chief Executive Officer pay
We explore the effect of institutional directors on Chief Executive Officer (CEO) pay (total, fixed, and variable compensation). We delve particularly into the impact of pressure-sensitive and pressure-resistant institutional directors, who, respectively, represent institutional investors who maintain and investors who do not maintain a business relationship with the firm whose board they serve on. Focusing on CEO total pay, the findings show that institutional and pressure-resistant directors on boards behave similarly, affecting CEO total pay in a nonlinear way: as the presence of institutional and pressure-resistant directors on boards increases, the monitoring hypothesis prevails, and subsequently, better corporate governance decreases CEO total pay. However, when their presence on boards exceeds a critical point, the entrenchment hypothesis holds, thereby leading to an increase in CEO total pay. Contrary to our predictions, pressure-sensitive directors do not affect CEO total pay. Regarding the CEO's compensation structure (fixed and variable), the results suggest that institutional and pressure-resistant directors increase fixed compensation and reduce variable pay, while pressure-sensitive directors affect neither fixed nor variable compensation. This evidence supports the view that institutional directors should be considered as a heterogeneous collective.
- Language
-
Englisch
- Bibliographic citation
-
Journal: BRQ Business Research Quarterly ; ISSN: 2340-9436 ; Volume: 23 ; Year: 2020 ; Issue: 3 ; Pages: 217-233 ; London: Sage Publishing
- Classification
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Management
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Personnel Management; Executives; Executive Compensation
- Subject
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CEO pay
Institutional directors
pressure-resistant
pressure-sensitive
- Event
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Geistige Schöpfung
- (who)
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Pucheta-Martínez, María Consuelo
Chiva-Ortells, Carlos
- Event
-
Veröffentlichung
- (who)
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Sage Publishing
- (where)
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London
- (when)
-
2020
- DOI
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doi:10.1177/2340944420941462
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Pucheta-Martínez, María Consuelo
- Chiva-Ortells, Carlos
- Sage Publishing
Time of origin
- 2020
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