Executive remuneration principles, practices and processes: an institutional logics perspective (2015)
Type of ContentJournal Article
PublisherInderscience Enterprises Ltd
University of Canterbury. Department of Accounting and Information Systems
Agency logic assumes that executives are greedy and opportunistic, which implies that monetary incentives are necessary to ensure they act in the best interests of shareholders; whereas corporate logic assumes that executives are trustworthy professionals, which implies that they will act in the best interests of shareholders irrespective of the use of monetary incentives. Prior qualitative research on executive remuneration is reviewed in this paper in order to ascertain how these logics influence the decision making of remuneration committees. Given that agency logic and corporate logic are opposites, there is a tension between the remuneration principles of pay-for-performance and competitive pay. However, corporate logic trumps agency logic as remuneration committees prioritise competitive pay ahead of other principles, so that talented executives will be retained. The paper also discusses a range of other remuneration principles and practices as well as the remuneration processes that have diffused both logics amongst remuneration committees.
CitationCrombie, N.A. (2015) Executive remuneration principles, practices and processes: an institutional logics perspective. International Journal of Corporate Governance, 6(2/3/4), pp. 98-140.
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KeywordsCorporate Governance; Executive Compensation; Compensation Committees; Institutional Theory; Institutional Logics Perspective
ANZSRC Fields of Research15 - Commerce, Management, Tourism and Services::1503 - Business and Management::150303 - Corporate Governance and Stakeholder Engagement
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