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Exploring The Link Between Executive Compensation Package And Executives' Pay Satisfaction In Croatian Companies: An Empirical Study

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  • Darko Tipuric
  • Danica Bakotic
  • Marina Lovrincevic
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    Abstract

    The executive compensation package can, and most often does, contain many elements. These elements have differing effects on executive motivation and risk taking propensity, and they impose different costs for the company. In that sense, the aim of this paper is to investigate the components of executive compensation packages in large Croatian companies as well as to identify the level of executives' satisfaction with their compensation packages. Our research results suggest that besides base salary, other components of executive compensation package are not adequately represented. Bonus is the most common form of variable pay, whereas stock options and stock grants are not included in executive compensation packages in large Croatian companies. Even though structure of executive compensation packages in large Croatian companies is, for the most part, not in line with theoretical postulates, top managers seem to be satisfied with their pay and other elements of their compensation package.

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    Bibliographic Info

    Article provided by Economic Laboratory for Transition Research (ELIT) in its journal Montenegrin Journal of Economics.

    Volume (Year): 9 (2013)
    Issue (Month): 2 ()
    Pages: 7-16

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    Handle: RePEc:mje:mjejnl:v:9:y:2013:i:2:p:7-16

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    Web page: http://www.mnje.com

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    1. Rajan, Raghuram G. & Wulf, Julie, 2006. "Are perks purely managerial excess?," Journal of Financial Economics, Elsevier, vol. 79(1), pages 1-33, January.
    2. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," CESifo Working Paper Series 3277, CESifo Group Munich.
    3. Garen, John E, 1994. "Executive Compensation and Principal-Agent Theory," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(6), pages 1175-99, December.
    4. Yermack, David, 2006. "Golden handshakes: Separation pay for retired and dismissed CEOs," Journal of Accounting and Economics, Elsevier, vol. 41(3), pages 237-256, September.
    5. Goergen, Marc & Renneboog, Luc, 2011. "Managerial compensation," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1068-1077, September.
    6. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(2), pages 225-64, April.
    7. Lucian A. Bebchuk & Robert J. Jackson, Jr., 2005. "Executive Pensions," NBER Working Papers 11907, National Bureau of Economic Research, Inc.
    8. Rangarajan K. Sundaram & David L. Yermack, 2007. "Pay Me Later: Inside Debt and Its Role in Managerial Compensation," Journal of Finance, American Finance Association, vol. 62(4), pages 1551-1588, 08.
    9. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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