With pension plans increasingly under the microscope in many companies, a recent 8-year study in the US examined the role of board composition in determining pension policies. The results indicate that outside directors play a valuable role in maintaining the interests of pension beneficiaries, with regards to both pension plan funding levels and asset allocations, and particularly in times of financial distress they help to keep the board on course to meeting its obligations toward pension plan beneficiaries.
Key Topics: Board of directors; Board composition; Outside directors; Pension policies; Defined benefit pension plans
Bonuses can often be depicted as additional and excessive compensation payments, particularly for senior management; however, a UK study investigated if bonuses generally act as a substitute for fixed compensation or as an addition to it. The study findings suggest that bonuses are typically a partial substitution of fixed compensation, with the extent of substitution being much larger in lower paid jobs.
Key Topics: Bonus; Variable pay; Pay for performance
Status inconsistency, which refers to situations where there is a mismatch between someone’s income and their background, can lead to various employee workplace outcomes both positive and negative. A recent study examined the relationship between status inconsistency and the personality traits of agreeableness and dominance to determine, and if the relationships differed by gender. The results found there were indeed differences in the level of status inconsistency depending on levels of agreeableness and dominance, and that these effects differed by gender.
Key Topics: Agreeableness; Dominance; Gender; Status inconsistency
CEO compensation is often seen, at least by the public, as too high and out of touch with the compensation of common workers. A study at Louisiana State University investigated the pay dispersion relationship between CEO compensation and general employee compensation across 54 countries by examining the role of informal and formal country-level institutions of social power structures, such as level of country development, strength of collective labor rights, and supply and demand market forces. Analysis found that a number of these structures effect CEO and employee compensation, as well as pay dispersion.
Key Topics: CEO compensation; Pay dispersion
Against the backdrop of increasing income inequality in many developed countries in recent decades, a recent study analyzed Danish private sector data from 1992 to 2007 to determine the level and trends of income inequality during that period. The results confirmed that income inequality increased in Denmark during this time. The researchers also found that the relative proportion of highly educated individuals increased, as did income growth rates across various employee subgroups, with managers seeing a particularly significant real income progression. Education and Management income premiums were found.
Key Topics: Income inequality; Upskilling; Education; Management pay
The determination of CEO compensation is often a difficult and contentious one. A study at the University of Illinois looked into companies’ use of peer benchmarking information in determining the compensation of their CEO and explored the social-psychological mechanisms which can explain compensation adjustments. The results found that CEO power moderates the relationship between a CEO’s compensation and the compensation of their peers, with CEO with greater power better able to push for benchmarking and higher compensation. Pay inequality versus peers was also found to be a strong motivator for CEOs to restore compensation equity.
Key Topics: CEO compensation; Benchmarking; Managerial power |
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