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    Executive remuneration principles, practices and processes: an institutional logics perspective

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    Embargoed until 1st July 2016 (616.9Kb)
    Author
    Crombie, N.A.
    Date
    2015
    Permanent Link
    http://hdl.handle.net/10092/11969

    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.

    Subjects
    Corporate Governance
     
    Executive Compensation
     
    Compensation Committees
     
    Institutional Theory
     
    Institutional Logics Perspective
     
    Field of Research::15 - Commerce, Management, Tourism and Services::1503 - Business and Management::150303 - Corporate Governance and Stakeholder Engagement
    Collections
    • Business and Law: Journal Articles [246]
    Rights
    https://hdl.handle.net/10092/17651

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