IDEAS home Printed from https://ideas.repec.org/a/bla/corgov/v12y2004i4p521-533.html
   My bibliography  Save this article

Why Do Companies Use Performance‐Related Pay for Their Executive Directors?

Author

Listed:
  • Ruth Bender

Abstract

This paper sets out the results of interview‐based research to determine why companies use performance‐related pay. The findings indicate that many companies adopt this structure despite a belief that the money does not motivate executives. Reasons related in part to best practice in human resource management: pay structures were designed to attract and retain executives with the potential of large earnings; to focus their efforts in the direction agreed by the board; and to demonstrate fairness. Importantly, the variable pay was seen as a symbol of the director's success, both internally and to his or her peers in other companies. Finally, and significantly, an institutional theory explanation was given: companies used performance‐related pay because their peers did, and because that legitimised them in the eyes of the establishment.

Suggested Citation

  • Ruth Bender, 2004. "Why Do Companies Use Performance‐Related Pay for Their Executive Directors?," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(4), pages 521-533, October.
    • Handle: RePEc:bla:corgov:v:12:y:2004:i:4:p:521-533
    DOI: 10.1111/j.1467-8683.2004.00391.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8683.2004.00391.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-8683.2004.00391.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sikka, Prem, 2010. "Smoke and mirrors: Corporate social responsibility and tax avoidance," Accounting forum, Elsevier, vol. 34(3), pages 153-168.
    2. Brian G. M. Main & Calvin Jackson & John Pymm & Vicky Wright, 2008. "The Remuneration Committee and Strategic Human Resource Management," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 225-238, May.
    3. James J. Cordeiro & Rajaram Veliyath & Jane B. Romal, 2007. "Moderators of the Relationship Between Director Stock‐Based Compensation and Firm Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1384-1393, November.
    4. Ruth Bender & Lance Moir, 2006. "Does ‘Best Practice’ in Setting Executive Pay in the UK Encourage ‘Good’ Behaviour?," Journal of Business Ethics, Springer, vol. 67(1), pages 75-91, August.
    5. Walker, James & Wood, Geoff & Brewster, Chris & Beleska-Spasova, Elena, 2018. "Context, market economies and MNEs: The example of financial incentivization," International Business Review, Elsevier, vol. 27(1), pages 21-33.
    6. Mallin, Chris & Melis, Andrea & Gaia, Silvia, 2015. "The remuneration of independent directors in the UK and Italy: An empirical analysis based on agency theory," International Business Review, Elsevier, vol. 24(2), pages 175-186.
    7. Alcindo Mendes & Rogério João Lunkes & Leonardo Flach & Silvana Dalmutt Kruger, 2017. "The influence of remuneration on the behavior of hospital employees in Brazil," Contaduría y Administración, Accounting and Management, vol. 62(1), pages 207-221, Enero-Mar.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:corgov:v:12:y:2004:i:4:p:521-533. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0964-8410&site=1 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.