Friendly compensation committees and pay‐for‐luck asymmetry: Evidence from Taiwan

2020 ◽  
Vol 28 (2) ◽  
pp. 141-156 ◽  
Author(s):  
Hunghua Pan ◽  
Yi‐Ping Liao ◽  
Chia‐Wei Hsu
Keyword(s):  
Compensation Committees

scholarly journals Can compensation committees effectively mitigate the CEO horizon problem? The role of co-opted directors

2020 ◽  
Vol 34 (1) ◽  
pp. 1-21
Author(s):  
Ruonan Liu
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Empirical Evidence ◽  
Design Methodology ◽  
Ceo Compensation ◽  
Content Type ◽  
Horizon Problem ◽  
Accruals Management ◽  
Compensation Committees

Purpose This study aims to examine whether compensation committees dominated by co-opted directors are less effective in mitigating the CEO horizon problem. Design/methodology/approach The author uses a sample of 7,280 firm-year observations from 1998 to 2011. Findings In this study, the author finds evidence of opportunistic research and development (R&D) reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors. Moreover, it is found that R&D reduction and income-increasing accruals are less discouraged when determining the compensation for retiring CEOs by compensation committees that are dominated by co-opted directors. The results suggest that compensation committees dominated by co-opted directors are less effective in adjusting CEO compensation to mitigate the CEO horizon problem. Originality/value The study reveals that co-opted directors are weak monitors. Moreover, the study adds empirical evidence to the debate of organizations’ CEO horizon problem. Finally, the study adds to the literature on corporate governance, revealing that compensation committees play an important role in mitigating an organization’s CEO horizon problem by adjusting CEO compensation.

Restructuring Charges and CEO Cash Compensation: A Reexamination

2003 ◽  
Vol 78 (1) ◽  
pp. 169-192 ◽  
Author(s):  
Davit Adut ◽  
William H. Cready ◽  
Thomas J. Lopez
Keyword(s):  
Adverse Effect ◽  
Executive Compensation ◽  
The Other ◽  
Cross Sectional ◽  
Factors Associated ◽  
Cash Compensation ◽  
Restructuring Charges ◽  
Restructuring Charge ◽  
A Charge ◽  
Compensation Committees

Prior research generally concludes that compensation committees completely shield executive compensation from the effect of restructuring charges on earnings. In contrast, we find that after controlling for the growth in annual inflation-adjusted CEO cash compensation, compensation committees only partially shield CEO compensation from the adverse effect of restructuring charges on earnings, on average. In further analyses, we identify factors associated with cross-sectional differences in the extent of shielding. Specifically, we find that compensation committees appear to: (1) completely shield initial and subsequent restructuring charges for CEOs with long tenure, provided that the firm had not recorded a charge in the two immediately prior years; (2) provide no shielding of subsequent restructuring charges taken by short-tenured CEOs if the firm reported a prior restructuring charge within two years of the current charge; (3) and partially shield the other categories of restructuring charges. Overall, this study provides evidence that compensation committees evaluate the context of each restructuring in determining the extent to which they will intervene to shield executive compensation from the effect of these charges.

scholarly journals Sense-Making in Compensation Committees: A Cultural Theory Perspective

2012 ◽  
Vol 33 (3) ◽  
pp. 389-421 ◽  
Author(s):  
Bertrand Malsch ◽  
Marie-Soleil Tremblay ◽  
Yves Gendron
Keyword(s):  
Cultural Theory ◽  
Sense Making ◽  
Compensation Committees

scholarly journals Determinants of nomination committee: New Zealand evidence

2011 ◽  
Vol 7 (2) ◽  
pp. 54-63 ◽  
Author(s):  
Md. Borhan Uddin Bhuiyan ◽  
Ahsan Habib
Keyword(s):  
Corporate Governance ◽  
New Zealand ◽  
Selection Process ◽  
Audit Committees ◽  
Cross Sectional ◽  
Controlling Shareholders ◽  
The One ◽  
Director Independence ◽  
Compensation Committees

A sizable volume of corporate governance literature documents that an independent and competent board of directors matter for organizational success. In order to function effectively, board comprises of different sub-committees and the three most common sub-committees are audit committees, compensation committees and nomination committees. Surprisingly, there is a paucity of research in understanding the determinants of nomination committee notwithstanding the importance of an independent nomination committee in board selection process. We contribute to the nomination committee literature by investigating the factors associated with the determination of nomination committees in New Zealand. We find that cross-sectional variation in the firm-specific characteristics affect the existence of nomination committees. This finding casts doubt on the „one-size-fits all‟ approach of corporate governance. Our logistic regression of the nomination committee determinants indicates that firm size, governance regulation and busy directors are positively associated with the existence of nomination committees, whereas firm leverage, controlling shareholders, and director independence are negatively related to the formation of nomination committees.

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