In many countries, gender diversity in the workplace is a hot topic and the role of women on corporate boards and compensation committees has come under scrutiny from regulators and legislators. A recent study of US companies examined the effect of compensation committee gender diversity on CEO compensation. Unsurprisingly, women were found to be underrepresented on compensation committees, however of the female members that there were, they were found to be younger and less experienced that their male counterparts. Additionally, greater gender diversity on compensation committees was not found to significantly influence the determination of CEO compensation.
Key Topics: Compensation committee; Gender diversity; Executive compensation; CEO compensation
With the competitive landscape becoming increasingly difficult, companies are looking for ways to optimize employee effort and performance. One mechanism used by many companies is pay-for-performance, linking compensation directly to performance. A Norwegian study investigated the role of base pay and variable pay-for-performance plans in the Insurance industry over a 2-year period, and found that such compensation plans can lead to increased effort and deceased turnover intentions, but via employee job motivation.
Key Topics: Pay-for-performance; Employee motivation; Employee effort; Turnover intention
With employee health problems and associated employer costs on the rise, many companies are looking for novel ways to improve employee wellness. A study at Cornell University examined the effect of tying 10% of manager compensation to employee wellness and found that managers were more likely to promote employee wellness when incentivized to do so, and managers also expressed a preference to work for companies with such incentives in place.
Key Topics: Workplace wellness; Employee health; Performance evaluations; Management compensation
The role of long term incentives, particularly equity holdings, in the decision making of CEOs has long been an area of interest for researchers and practitioners alike, given the potential significance of this relationship in company performance. A recent study of CEOs of US companies examined how a CEOs stock option holdings can affect their preference for short- or long-term strategic projects. The study found that when CEOs have accumulated stock option wealth, their likelihood of investing in the long-term increases, however when they have a large amount of recently granted options CEOs are more likely to prefer short-term projects.
Key Topics: Executive compensation; Stock options; Long term incentives; CEO decision making; Temporal orientation
The effect of variable compensation on job performance has been well established, although the examination of incentive plans relating to performance against budget targets has received limited attention. A study of the Australian manufacturing sector examined the role of organizational commitment and trust-in-supervisor in the relationship between budget-based incentive compensation schemes and employee job performance and found that such schemes can lead to greater trust-in-supervisor, which in turn leads to greater subordinate job performance and organizational commitment.
Key Topics: Variable compensation plans; Trust-in-supervisor; Organizational commitment; Job performance
It is not always easy to sympathise with CEOs, particularly when it comes to compensation, however a US study sought to shed light on the personal financial impact of corporate bankruptcy on CEOs and how it affects their career earnings. The study examined CEOs of US companies that filed for bankruptcy and found that for CEOs who left the executive labor market following their tenure with a bankrupt company, there was a significant financial loss incurred over the remainder of their career. For those maintaining executive employment, no adverse personal financial effects were found.
Key Topics: CEO compensation; Bankruptcy costs; Executive turnover |
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