The Compensation Committee Process

• 成果类型: Article
• 署名作者: Hermanson, Dana R.; Tompkins, James G.; Veliyath, Rajaram; Ye, Zhongxia (Shelly)
• 署名单位: University System of Georgia; Kennesaw State University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/j.1911-3846.2011.01118.x
• 发表日期: 2012
• 页码: 666-+
• 关键词: ceo cash compensation; corporate governance; restructuring charges; performance; pay; SUBSTANCE; audit; firm; disclosure; OWNERSHIP

摘要

Executive compensation and compensation committees have been the focus of intense public scrutiny and significant academic research. However, research has primarily examined compensation committee inputs and outputs, with the committee process being treated as a black box and remaining relatively unexamined. Accordingly, our fundamental research question in this study is, What process specific actions and thought processes) do U. S. public company compensation committees employ to meet their responsibilities?'' Based on in-depth interviews of 20 compensation committee members, we describe compensation committees' typical areas of responsibility, common approaches to meeting these responsibilities and some alternative approaches), and committee operational issues. In addition, we discuss five major themes or thought processes that emerged from the interviews: achieving balance and fairness in compensation, considering the expertise and independence of the committee and consultant, promoting the legitimacy of the committee's processes and decisions, monitoring risks and promoting the right behaviors, and dealing with public opinion and economic conditions. Most fundamentally, many of the interviewees indicated a profound tension among the demands of shareholders, management, and other stakeholders. Many of the interviewees appeared to describe a pervasive tension between resource dependence theory paying enough to be reasonable in the market and retain executives through fair compensation) and agency theory pay for performance, proper alignment of incentives, and shareholder-friendly compensation). In addition, the mimetic pillar in institutional theory would suggest that compensation is not seen to be excessive compared to managerial labor market norms. Overall, the findings highlight the need to move beyond a simple agency theory view of corporate governance and to consider multiple theoretical perspectives.