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Article
Publication date: 1 February 1998

Pearl Meyer

The use of stock options as part of incentive compensation is burgeoning. Not only are more and more companies establishing option grant programs, but executives are getting…

90

Abstract

The use of stock options as part of incentive compensation is burgeoning. Not only are more and more companies establishing option grant programs, but executives are getting larger and larger awards.

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Journal of Business Strategy, vol. 19 no. 2
Type: Research Article
ISSN: 0275-6668

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Article
Publication date: 1 April 1996

Leslie Wines

In recent months there's been much angry outcry about the colossal compensation sums racked up by some CEOs—notably AT&T's Robert Allen's well‐publicized haul of up to $16 million…

274

Abstract

In recent months there's been much angry outcry about the colossal compensation sums racked up by some CEOs—notably AT&T's Robert Allen's well‐publicized haul of up to $16 million in 1995. Some observers, viewing such pay packages as rewards for boosting stock prices by cutting jobs, rail against a perceived lack of social conscience. Other critics, such as the administrators of CALPERS, California's powerful public employee pension fund, worry that excessive rewards for dramatic short‐term boosts in share prices ultimately will degrade the long‐term value of the equities they manage.

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Journal of Business Strategy, vol. 17 no. 4
Type: Research Article
ISSN: 0275-6668

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Book part
Publication date: 7 June 2010

Abstract

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Research in Personnel and Human Resources Management
Type: Book
ISBN: 978-0-85724-126-9

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Article
Publication date: 9 April 2018

Patrick M. Wright and Anthony J. Nyberg

This paper aims to explore some of the practical challenges boards face in setting chief executive officer (CEO) pay to show why the failure to see considerable overlap between…

482

Abstract

Purpose

This paper aims to explore some of the practical challenges boards face in setting chief executive officer (CEO) pay to show why the failure to see considerable overlap between pay and performance may not be due to poor governance.

Design/methodology/approach

This paper critically explores the different types of pay reported in public sources (actual vs realized) and the types of performance measures used in CEO pay research. This paper then conceptually reviews the broader governance responsibility of boards, particularly the hiring and firing of CEOs and the impact these decisions have on CEO pay.

Findings

The authors suggest that much of the lack of overlap between pay and performance may be because of misaligned timing of the pay and performance measures, differences between internally promoted and externally hired CEOs and severance packages of fired CEOs. They conclude that the lack of overlap may not signal failure on the part of boards, but rather may reflect the risk and uncertainty those boards face in hiring and firing of CEOs.

Research limitations/implications

The analysis shows how using publicly available sources of pay and performance data ignores the practical challenges that boards face in setting pay, and suggests greater care be given to future research purporting to show that boards are failing in their governance responsibilities.

Practical implications

CEO pay may not be as misaligned with performance as many researchers conclude, but may be due to the risks and uncertainty inherent in governance.

Social implications

The distributive justice critique of CEO pay may not be valid.

Originality/value

As opposed to simply mining public databases, this paper more accurately describes some of the variables that impact how boards set CEO pay.

Objetivo – Este artículo explora alguno de los retos prácticos a los que se enfrentan los consejos de administración a la hora de fijar la retribución del CEO para mostrar que la falta de solapamiento entre retribución y resultados puede no deberse a un mal gobierno corporativo.

Diseño/metodología/aproximación – El artículo explora de forma crítica los diferentes tipos de retribución disponibles en fuentes públicas (actual vs realizado) y el tipo de medidas de resultados empleados en la investigación en retribución de CEOs. A continuación el artículo revisa conceptualmente las funciones del consejo de administración, en particular la de contratar y despedir al CEO y el impacto que estas decisiones tienen en la retribución del CEO.

Resultados – Proponemos que mucha de la falta de solapamiento entre retribución y resultados puede deberse a una falta de sincronía temporal entre las medidas de retribución y resultados, a diferencias los CEOs promocionados desde dentro y los contratados fuera, y los paquetes de indemnización de los CEOs despedidos. Concluimos que la falta de solapamiento puede no estar indicando fallos en la acción del consejo de administración, sino el riesgo y la incertidumbre al que se enfrentan estos consejos a la hora de contratar y despedir CEOs.

Limitaciones/implicaciones – Nuestro análisis muestra como usar fuentes públicas sobre retribución y resultados lleva a ignorar los retos prácticos a los que se enfrentan los consejos a la hora de definir la retribución, y sugiere que la investigación futura debe ser más cuidadosa cuando afirme que los consejos de administración no están realizando sus funciones correctamente.

Implicaciones prácticas – La retribución del CEO puede no estar tan mal alineada con los resultados tal y como muchos investigadores concluyen, sino que esto es un reflejo de los riesgos e incertidumbres inherentes al gobierno corporativo.

Implicaciones sociales – La crítica a la justicia distributiva de la retribución del CEO puede no ser válida.

Originalidad/valor – En oposición a simplemente explotar bases de datos públicas, este artículo describe con mayor precisión algunas de las variables que influyen en como los consejos definen la retribución del CEO.

Objetivo – Esse artigo explora alguns dos desafios práticos enfrentados pelos conselhos administrativos ao estabelecer a remuneração do CEO, a fim de mostrar porque a incapacidade de ver a correlação entre o pagamento e a performance pode não ser atribuída à má governança.

Design/método/abordagem – O artigo explora de forma crítica os diferentes tipos de remuneração relatados em fontes públicas (real vs já realizado), e os diferentes tipos de medidas de performance utilizadas em estudos sobre remuneração de CEO. O artigo também revisa conceitualmente as funções do conselho administrativo, especificamente a de contratar e demitir CEOs, e o impacto que essas decisões têm na remuneração do CEO.

Resultados – Nós sugerimos que grande parte da falta de correlação entre pagamento e performance ocorre devido ao desalinhamento entre as medidas de performance e o momento do pagamento, às diferenças entre CEOs promovidos internamente e contratados externamente, e a pacotes de indenização de demissão de CEOs. Nós concluímos que a falta de correlação pode não significar uma falha por parte do conselho administrativo, e sim um reflexo do risco e da incerteza que esses conselhos enfrentam ao contratar e demitir CEOs.

Limitações/implicações – Nossa análise mostra como o uso de base de dados de pagamento e de desempenho publicamente disponíveis ignora os desafios práticos que os conselhos administrativos enfrentam ao estabelecer a remuneração do CEO, e sugere que pesquisas futuras devem ser mais cuidadosas ao afirmarem que os conselhos administrativos estão falhando em suas responsabilidades de governança.

Implicações práticas – A remuneração do CEO pode não estar tão desalinhada com os resultados como concluem muitos pesquisadores, pois pode ser um reflexo dos riscos e incertezas inerentes à governança.

Implicações sociais – A crítica à justiça de distribuição do pagamento do CEO pode não ser válida.

Originalidade/valor – Em oposição a simplesmente explorar base de dados públicos, este artigo descreve de forma mais acurada algumas variáveis que impactam como o conselho administrativo estabelecem a remuneração do CEO.

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Book part
Publication date: 7 June 2010

M. Ronald Buckley holds the JC Penney Company Chair of Business Leadership and is a professor of management and a professor of psychology in the Michael F. Price College of…

Abstract

M. Ronald Buckley holds the JC Penney Company Chair of Business Leadership and is a professor of management and a professor of psychology in the Michael F. Price College of Business at the University of Oklahoma. He earned his Ph.D. in industrial/organizational psychology from Auburn University. His research interests include, among others, work motivation, racial and gender issues in performance evaluation, business ethics, interview issues, and organizational socialization. His work has been published in journals such as the Academy of Management Review, Personnel Psychology, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, and the Journal of Management.

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Research in Personnel and Human Resources Management
Type: Book
ISBN: 978-0-85724-126-9

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Article
Publication date: 26 November 2024

Sujoy Sen and Kuldeep Singh

We aim to address the evolving phenomenon of dry promotions and its impact on employee well-being in organizations. Dry promotion, its possible effects on employee well-being and…

32

Abstract

Purpose

We aim to address the evolving phenomenon of dry promotions and its impact on employee well-being in organizations. Dry promotion, its possible effects on employee well-being and some strategies to mitigate its adverse consequences are presented as a viewpoint paper.

Design/methodology/approach

The arguments in this viewpoint are built on theoretical insights drawn from various organizational theories, such as Maslow’s hierarchy of needs, Herzberg’s two-factor theory and self-determination theory. However, the main line of thought revolves around positive psychology theory, which assesses the paper’s existing literature, news articles and case studies to discuss the emerging phenomenon concisely.

Findings

Dry promotion is often characterized by job title upgrades without corresponding pay increases. While dry promotion may satisfy higher-level needs for some individuals, they usually neglect lower-level needs, leading to stress and work-life imbalance, ultimately causing detrimental effects on employee well-being. Strategies at individual, group and organizational levels are crucial to navigate this phenomenon and its consequences. We argue that fair communication, supportive workplace culture and providing avenues for skill enhancement curtail the adverse effects of dry promotion on employee well-being. In addition, a culture fostering mindfulness can help employees navigate the challenges of increased responsibilities without proportional financial rewards.

Practical implications

Our study can provide at least some guidance on how to navigate through the phenomenon of dry promotions.

Originality/value

Our paper contributes to the scant literature on dry promotions by assessing the likely effects of dry promotions on employee well-being and suggesting practical strategies to deal with it.

Details

Journal of Health Organization and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1477-7266

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Article
Publication date: 10 January 2023

Stephen J. Perkins and Susan Shortland

Drawing on institutional theory, this study aims to analyse the regulation of executive remuneration as espoused in the United Kingdom (UK) codified corporate governance…

264

Abstract

Purpose

Drawing on institutional theory, this study aims to analyse the regulation of executive remuneration as espoused in the United Kingdom (UK) codified corporate governance principles, focussing on sources of advice to decision-makers, the nature of the advice sought and given, and interaction of those involved in the process.

Design/methodology/approach

A qualitative research design was used. Data were assembled from interviewing non-executive board/remuneration committee members; institutional investors; external remuneration consultants and internal human resources (HR)/reward specialists. Results were analysed in accordance with the Gioia technique.

Findings

Tensions inherent in the interpretation of corporate governance codes are illustrated. Emphasis on independent advice combined with constraints on decision-makers' capacity to navigate the nuances of a complex field and reputational concerns risks standardised instead of bespoke remuneration approaches aligned with corporate contexts.

Practical implications

There is a role for internal HR advisors to add value through their potential to reduce the gap within remuneration committees between institutional contexts and independent decision-making, facilitating more strategic human resource management inspired executive remuneration.

Originality/value

Application of institutional theory indicates the relevance of balancing external with internal sources to secure advice that is horizontally and vertically aligned within an organisation to meet the letter and spirit of corporate governance norms. Extending the explanatory power of institutional theory, care is needed though not to overlook the normative underpinnings of professional advisors' own value sets.

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Journal of Organizational Effectiveness: People and Performance, vol. 10 no. 3
Type: Research Article
ISSN: 2051-6614

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Article
Publication date: 4 November 2014

Shin-Shin Chang, Chung-Chau Chang, Ya-Lan Chien and Jung-Hua Chang

This research aims to analyze whether the self-regulatory focus, a consumer variable, moderates the impact of incongruity on consumer evaluations. A congruity or typicality arises…

1199

Abstract

Purpose

This research aims to analyze whether the self-regulatory focus, a consumer variable, moderates the impact of incongruity on consumer evaluations. A congruity or typicality arises when a product (e.g. champagne) is consistently consumed in certain occasions or is used in conjunction with other specific products. This typicality may remind people of the product with regard to specific contexts but may limit the product’s overall versatility. In line with the moderate incongruity effect, there may be an opportunity to extend a product usage to situations associated with moderate incongruity or atypicality.

Design/methodology/approach

Study 1 is a 2 (self-regulatory focus: promotion/prevention) × 3 (atypicality of product usage context: typical/moderately atypical/highly atypical) between-subject experimental design. Study 2 replicated Study 1 with a sample of different age, three different champagne usage contexts and a manipulation of self-regulatory focus. Study 3 is a 2 (self-regulatory focus: promotion/prevention) × 3 (atypicality of product usage context: typical/moderately atypical/highly atypical) × 2 (product replicates: red wine/pearl jewelry) mixed design with self-regulatory focus and atypicality as between-subjects factors and product replicates as a within-subject variable.

Findings

Promotion-focus consumers’ product evaluations for the moderate incongruity or atypicality are higher than those for congruity and extreme incongruity. The relationship takes an inverted-U shape. Prevention-focus consumers’ product evaluations decrease monotonically as congruity decreases. Moreover, compared with prevention-focus individuals, promotion-focus ones evaluate moderate incongruity more favorably.

Research limitations/implications

There are some limitations to this research. First, it only investigates the moderate incongruity effect with regard to product use occasions and complementary products. To increase the external validity of self-regulatory focus as a moderator of incongruity-evaluation relationships, it remains to future research to extend the research setting to products which have been tightly bonded to specific users, locations, seasons or times. Second, although the experimental designs are similar to previous ones, the scenarios are nevertheless imaginary. Therefore, participants’ involvement levels in all manipulated situations, as well as the quality of their answers, remain unknown.

Practical implications

First, brand managers should target only promotion-focus customers to obtain the moderate incongruity effect, but should maintain a consistent marketing strategy for prevention-focus customers. Second, because both promotion- and prevention-focus individuals have unfavorable evaluations of extreme incongruity, drastic changes in marketing strategies should be avoided. Third, people from a Western (Eastern) culture exhibit more promotion (prevention) focus orientation. Therefore, the type of culture can serve as an indicator of regulatory orientation. Fourth, a gain-framed appeal is recommended for realizing the moderate incongruity effect from promotion-focus consumers. Finally, promotion-focus (vs prevention-focus) consumers will welcome a moderately nonalignable than alignable product upgrade.

Originality/value

Most prior research on goal orientation has found that promotion-focus (vs. prevention-focus) individuals are more inclined to adopt new products, but both types of people are unlikely to purchase new products when the associated risks become salient, while the research related to schema incongruity has suggested that the moderate incongruity effect may not exist when consumers perceive high risks. By combining both schema congruity and self-regulatory focus theories, this research provides a more precise picture of how and why a person’s goal orientation influences the relative salience of risks and benefits with an increase in incongruity.

Details

European Journal of Marketing, vol. 48 no. 11/12
Type: Research Article
ISSN: 0309-0566

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Book part
Publication date: 25 April 2014

Malcolm Tight

This chapter examines the case of threshold concepts, as an example of a theory being developed and applied within higher education research. It traces the origins and meaning of…

Abstract

This chapter examines the case of threshold concepts, as an example of a theory being developed and applied within higher education research. It traces the origins and meaning of the term, reviews its application by higher education researchers and discusses the issues it raises and the critiques it has attracted. This case is of particular interest, as the idea of threshold concepts is little more than a decade old, yet in that time it has attracted considerable attention.

Details

Theory and Method in Higher Education Research II
Type: Book
ISBN: 978-1-78350-823-5

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Article
Publication date: 27 July 2012

Nancy Mohan and M. Fall Ainina

Until 2005, corporations could choose whether to expense incentive options or to disclose the value in the financial footnotes. During 2004, however, the Financial Accounting…

631

Abstract

Purpose

Until 2005, corporations could choose whether to expense incentive options or to disclose the value in the financial footnotes. During 2004, however, the Financial Accounting Standards Board adopted the revised Statement No. 123, which requires public corporations to measure the cost of stock options on grant‐date and expense that cost over the vesting period of the grant. This study investigates the impact of SFAS 123(R) on the type of executive incentive pay‐option versus restricted stock.

Design/methodology/approach

Comprehensive compensation data was collected from Standard & Poors ExecuComp data base for the period 2002‐2006 for two industries identified by SIC codes 73 (business services) and 35 (electronics). The study tracks the percentage of pay in the form of incentive stock options or restrictive stock grants before and after SFAS No. 123(R) was adopted in 2004. A series of multivariate regression models test whether the restricted stock percentage of total compensation can be partially explained by the adoption of SFAS 123(R).

Findings

The results show that the average fair value of stock awards is higher and the average fair value of option awards is lower after 2004. In addition, after 2004, stock compensation as a percentage of total pay is positively related to stock price volatility. The data also suggest that those companies substituting restricted stock for options actually increase total incentive pay.

Social implications

The study's findings may suggest that those companies substituting restricted stock for options increase total executive pay. This would be a side effect from the adoption of SFAS 123(R), in that most companies use the Black‐Scholes model to value executive options. Given the long life of these options and the high volatility in certain industries the option value is quite high. Therefore, the amount of substituted restricted stock is also inflated.

Originality/value

The adoption of SFAS 123(R) was highly contested by executives in industries with high stock price volatility. The authors document that, in the case of two industries, executive incentive pay structure was affected.

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