The Governance of Directors' Pay: Evidence from UK Companies

We examine the determination of directors' compensation in UK quoted companies between 1985 and 1994. The primary innovation contained in the paper is the focus on the governance mechanisms that determine pay outcomes. Our results indicate that: (i) directors' compensation is positively related to pre-dated shareholder returns and company size with the quantitative effect of the latter dominating the former. (ii) We find that the pay-for-performance link has become quantitatively stronger over our sample period. (iii) There has been positive adherence to the principles of the Cadbury report, but these variables play little statistical role in shaping the direct compensation of top directors.     

Total Board Compensation,Governance and Performance of Spanish Listed Companies

In this paper we present empirical evidence on the relationship between board remuneration of a sample of large Spanish companies and a set of explanatory variables such as performance and size of the company. The objective is to provide additional empirical evidence based on the agency theory for the Spanish institutional context, which differs from most ‘Anglo–Saxon’ model studies. We focus on the impact of a company's governance structure on the relationship between pay and performance. Specifically, we consider ownership concentration and firm leverage as key determinants of the board–shareholders relationship. Our results confirm the positive relationship between board remuneration and company performance, which is stronger for book values than for stock market measures. Industry performance also explains the remuneration and provides useful information for evaluating board behaviour. Company size is also related to board remuneration and affects the pay–performance relationship, although it is not relevant when we use an elasticity approach. Finally, the governance structure of companies is relevant when explaining the power of the compensation–performance relationship, and differences between the impact of ownership concentration and firm leverage on this relationship are found.     

Executive pay, tournaments and corporate performance in UK firms

This paper explores the relationship between executive pay and corporate performance. First, we focus on the pay-for-performance sensitivity (PPS), review recent evidence (mainly UK) and outline a methodology for calculating the PPS itself. Secondly, we review the evidence on tournament theory. Tournament models predict that career concerns generate incentives for executives and can explain observed variations in pay outcomes in the boardroom. Thirdly, we provide evidence on the distribution of the PPS for 532 executives within 100 large UK stock market companies for 1997. Unlike prior work, we include non-CEO executives in the analysis. We show that the PPS increases through organizational levels. Also the statistic is not constant across firms. Finally, we consider the relationship between corporate performance and incentives. We show, consistent with prior evidence, that there is a positive relationship between firm performance and the effective ownership of stock-based compensation by management.     

The Adverse Consequences of Share-Based Pay in Risky Companies

Shareholders increasingly regard it as desirable to link director pay packages to the share price, in order to align directors’ incentives with those of the shareholders. The result of such remuneration packages is that directors’ wealth will become concentrated in one stock, giving them an undiversified portfolio of shares. The resulting need to diversify will encourage directors to exercise their share options, irrespective of their expectations about future stock price performance. This benefit to diversifying will be greater the riskier the stock. Consistent with this, this paper finds that only option exercises in relatively low risk companies are informed, and precede significantly negative abnormal returns over the following 2-month period. As a result, providing directors in riskier companies with share-based pay packages might not be effective in aligning their incentives with those of the shareholders.     

Board compensation and ownership structure: empirical evidence for Italian listed companies

This paper investigates the relationships among corporate ownership, the level of board compensation, and firms’ future performance within Italian listed companies. Board compensation could be related to corporate ownership characteristics, like the type of controlling shareholder, ownership concentration, the separation between cash flow and voting rights, and the presence of shareholders’ agreements. The evidence of high levels of board compensation associated with certain governance characteristics could signal, in a principal-agent framework, rent extraction by entrenched managers or by controlling shareholders versus minority shareholders; high board compensation, however, could be related to the need to hire directors with higher professional standing and also to the desire to create a network with other companies through the enlargement of the board, according to a social network view. In this paper we disentangle this issue showing the relationship between excess board compensation and future performance: examining firms listed on the Milan Stock Exchange over the period 1995–2002, we show that board compensation is linked to many governance characteristics, but excess compensation is never positively related to future performance. For founder family firms, in particular, high board compensation is associated with (a) smaller board size; (b) higher proportion of family members on the board; (c) lower future performance. The whole evidence therefore doesn’t support the hypothesis suggested by the social network view, but is consistent with a rent extraction hypothesis. These results could add new empirical evidence to the recent debate on the need for global remuneration reform. According to our results, some control mechanism and an increase in transparency of executive compensation schemes could be appropriate.     

The Determinants of Non-Executive Representation on the Boards of Large UK Companies

An important aspect of current governance practice is theutilisation of non-executive directors to monitor the behaviourof senior management. The purpose of this paper is to provide aninitial insight on the determinants of non-executiverepresentation on the boards of large UK companies. The studyadopts an agency theory perspective, focusing specifically on theimpact of company size and ownership on non-executiverepresentation. I find that larger companies, where monitoringvia ownership is expected to be less efficient, utilise higherlevels of non-executive representation. I also find thatnon-executive representation is positively associated with theownership of external blockholders. The presence of CEO/chairmanduality has a negative impact on non-executive representation. Overall, the findings suggest that companies utilise boards withstronger monitoring potential when size and ownershipcharacteristics suggest that alternative governance mechanismsmay be unable to ensure managers pursue shareholders' interests.     

New perspectives on the governance of executive compensation: an examination of the role and effect of compensation consultants

We develop a multi-theoretic approach, drawing on economic, institutional, managerial power and social comparison literatures to explain the role of the external compensation consultant in the top management pay setting institutional field. Taking advantage of recent disclosure requirements in the UK, we collect data on compensation consultant use in 232 large companies. We show that consultants are a prevalent part of the CEO pay setting scene, and document evidence of all advisor use. Our econometric results show that consultant use is associated with firm size and the equity pay mix. We also show that CEO pay is positively associated with peer firms that share consultants, with higher board and consultant interlocks, and some evidence that where firms supply other business services to the firm, CEO pay is greater.     

薪酬激励、董事会监管与上市公司盈余管理

本文以2002-2004年间沪深两地上市公司为研究样本,分行业采用修正的截面Jones模型对上市公司的可操控性应计利润进行计算,以此作为衡量盈余管理程度的代理变量;在此基础上,考察了高管人员薪酬激励、董事会监管与盈余管理之间的关系.在控制了上市公司资产规模和债务水平之后,研究发现,管理层薪酬水平与调高的操控性应计利润高度正相关,表明薪酬激励构成了中国上市公司盈余管理的一个基本诱因;董事会监管机制对于盈余管理的制约作用并不明显,但本文研究发现董事会规模与调高的操控性应计利润显著负相关,规模较大的董事会能够降低盈余管理的程度.     

Executive remuneration standards and the “conformity gap” at controlled corporations

In this paper we analyze the relationship between conformity to executive remuneration standards, corporate ownership, and the level and structure of CEO compensation for large European listed companies in the years 2007 and 2010. We show that controlled corporations conform to executive remuneration standards less than widely held firms. We also show that weaker compliance is associated with lower CEO pay and more cash-based incentive structures. We interpret this “conformity gap” from the perspective of individual firms and from a societal perspective, with the aim to contribute to frame the policy questions concerning executive pay at controlled corporations. Different policy implications depend on whether the conformity gap reflects a lower need for managerial incentives, given the monitoring by controlling shareholders, or the latter’s willingness to extract private benefits of control. We argue in this paper that the former hypothesis prevails, so that regulators should abstain from increasing the level of enforcement of executive remuneration standards.     

金融高管薪酬与公司绩效关系实证研究

应用方程估计与曲线拟合的方法,在国内外高管薪酬快速增长的背景下,以2001-2008为时间窗口,研究了沪深两市金融类上市公司高管薪酬结构和薪酬水平与公司绩效的相关性问题,通过绩效评价模型和回归模型的求解,实证研究发现,我国金融类上市公司高管薪酬水平和薪酬结构与公司绩效均基本无关,国有金融类上市公司高管薪酬明显高于非国有金融类上市公司高管薪酬,而其绩效差异却不显著,说明我国政府对国有金融类上市公司高管薪酬实行限制,符合市场经济发展规律和基本要求,但在非国有金融类上市公司内及其他垄断性行业内,高管薪酬的差别也较大。因此,也有必要将这种限制拓展到非国有金融企业以及其它垄断性行业。     

Strategic vision or strategic con?: Rhetoric or reality?

Major companies devote considerable effort to communicating corporate visions and missions. Yet three recent surveys suggest that much of this effort has been counter-productive. A gap has emerged between rhetoric and reality. Arenas of confrontation have arisen between directors and managers, head offices and business units, holding companies and their subsidiaries, and between specialists and generalists. A widespread desire for corporate transformation is not matched by understanding of how to bring it about. The lack of top management commitment and of communication skills are major barriers to change. More competent directors and more effective boards are needed. The article suggests key roles for the chairman and the chief executive. It examines how best to share a compelling vision, and identifies a requirement for new attitudes and approaches to communication.     

Challenges of Hong Kong toy manufacturers operating plants in the Pearl River Delta

For years, Hong Kong has been the worlds largest toy exporter. However, as the costs of rent and labor have increased drastically over the past years, Hong Kong toy manufacturers have moved their labor-intensive operations to other lower-wage areas. The Pearl River Delta (PRD) region of the Peoples Republic of China (PRC) has been one of their favorite choices for outsourcing because of cheap and available labor. This paper explores, using data culled from interviews with the senior management of five leading Hong Kong toy companies, how some Hong Kong toy manufacturers overcame various strategic management issues after having made the move to the PRD. The results are presented within five major areas of concern: rules and regulations, the less-developed infrastructure, R&D, relationship with suppliers, and new technology, and they are used to show how the manufacturers were able to overcome various strategic constraints in order to accomplish outstanding performance. Supporting data were gathered through factory visits in order to better understand the actual operations within the PRD. This collected experience should be beneficial to other manufacturers interested in operating plants within the PRD.     

上市公司独立董事独立性的界定与公司治理结构的关系——美国、香港地区与中国大陆的对比分析

独立董事是加强董事会的独立性、改善公司治理结构的有效手段之一。越来越多的国家的证监部门要求其上市公司引入独立董事并强调独立董事在董事会中占据一定比例。独立性是独立董事发挥作用的前提和基础。本文以美国和香港为例论述了上市公司独立董事独立性的界定与公司治理结构之间的密切关系,并在分析中国上市公司治理格局和特殊国情的基础上,提出现阶段中国应从独立于大股东、独立于可交易股份中的相对大股东、独立于经营者和独立于不正当的行政干扰四个角度来界定独立董理的独立性。     

中小商业银行公司治理机制与经营绩效关系的实证分析

理论和实证研究证明,良好的公司治理对金融体系稳健运行有十分重要的作用.商业银行公司治理的研究和实践既是银行业改革的迫切要求,也是银行业改革的核心内容之一.本文用36家商业银行2005年的截面数据,对股权结构、董事会、监事会和高管人员薪酬激励等四个治理机制与银行绩效之间的关系进行了实证研究.结果表明,国有与非国有控股商业银行绩效不存在显著差异,第一大股东对银行绩效的影响并不显著,但外部大股东能显著地提高银行绩效.董事会与监事会规模与银行绩效正相关,但独立性难以得到保证.此外,高管人员薪酬激励不能改善银行绩效.     

Managers as Monitors: An Analysis of the Non‐executive Role of Senior Executives in UK Companies

An important aspect of current governance practice is the use of non‐executive directors to monitor the behaviour of company management. This paper examines the extent to which senior executives are utilized as non‐executives in large UK companies. The results suggest that executive directors are not an important source of non‐executive directors. The average number of non‐executive directorships held by each executive is 0.22. Indeed, 85% of executives hold no additional directorships. The holding of non‐executive directorships is positively related to the strength of board monitoring in the executive's company, executive tenure and company size. Executives in companies with greater growth opportunities and operating in regulated industries are less likely to hold non‐executive directorships.     

董事会特征与总经理变更

本文以在上海证券交易所1999年前上市的公司为样本,研究董事会特征等治理变量对总经理变更的影响。研究结果表明,对相对业绩下降公司的总经理变更能起到显著解释作用的变量只有董事会会议的次数和公司的领导结构。而其它治理变量,诸如董事会规模、管理董事比例、独立董事比例、股权集中度、董事会成员持股比例等,未能对总经理变更起到显著的解释作用。     

上市公司治理因素与财务困境关系的实证研究

对中国上市公司治理因素与财务困境的关系进行了实证研究。以1998~2005年被ST(special treatm ent)的公司及其配对样本共计528家作为研究样本,通过使用二元Log istic回归分析方法,发现大股东持股比例、H-10股权集中指数、股权制衡度、国家股比例、最终控制人类型、独立董事持股比例以及审计意见与公司发生财务困境的可能性显著负相关,管理者代理成本显著提高了公司陷入财务困境的危险性。而高管持股比例、董事会规模以及CEO的双职合一对困境发生的概率无显著影响。     

来自新兴市场的公司上市对目的地市场的影响——以中国香港市场为例

选取1993-2017年数据,以H股在香港证券市场上市为研究对象,运用DCC-MVGARCH模型、线性回归模型和事件研究法等多种组合方法,考察来自新兴市场的公司上市对目的地市场发展和目的地既有上市公司影响。结果表明：第一,H股在港上市扩大了香港市场的市场规模和交易活动,吸引了更多的国际资本流入;第二,H股在港上市提升了H股与香港市场既有股票的收益相关性,以及香港市场与大陆市场及全球市场的联动性;第三,H股在港上市对既有股票的估值影响是积极的。总之,来源于新兴市场的公司上市对目的地市场和既有上市公司的综合影响是积极的,溢出效应大于"质量传染"效应和分流效应,促进了目的地市场质量提升和市场发展。本文结论有助于丰富跨境上市对目的地市场影响的研究,对于基于"一带一路"新兴市场国家开放资本市场战略构建国际金融中心的我国具有重要的启示意义。     

上市公司高层管理人员监控的有效性研究

政府作为国有企业的出资人和国有产权的代理人,将政府机构控股转移到国有企业控股,并通过法规和准则来加强公司治理,以此来提高对上市公司监控的有效性。由此,使用公司业绩作为上述2项措施发挥监控作用的替代变量,实证分析其对上市公司监控的有效性。研究结果表明,国有企业控股公司比政府机构控股公司更能监控高层管理人员;同时,高层管理人员的变更对公司业绩有较高的敏感性,但公司治理机制并没有对公司高层管理人员变更与公司业绩的敏感性产生重大影响。在我国,上市公司由于业绩欠佳而更换高层管管理人员时,对控股股东的激励比公司治理机制更重要。