The use of nonfinancial performance measures in CEO bonus compensation

Cho, Myojung; Ibrahim, Salma; Yan, Yan

doi:10.1111/corg.12280

Cited by 39 publications

(31 citation statements)

References 92 publications

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“…They show that powerful CEOs are able to influence the adoption and choice of performance targets implemented in performance‐vested stock option plans, particularly in an attempt to appease public outrage. Similar effects have been considered with regard to bonus plans within the UK setting (Cho, Ibrahim, & Yan, ). Overall, these studies suggest that both the mix of performance targets as well as individual targets are influenced by powerful CEOs.…”

Section: Relevant Literature and Hypotheses Developmentmentioning

confidence: 90%

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Powerful CEOs, cash bonus contracts and firm performance

Bachmann

Loyeung

Matolcsy

et al. 2019

Business Fin & Account

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We investigate whether powerful chief executive officers (CEOs) influence the conditions of their cash bonus contracts. Specifically, we examine (i) the association between CEO power and the proportion of ex‐ante cash bonus to base salary (bonus ratio), (ii) the association between CEO power and the relative use of non‐financial to financial performance targets in cash bonus contracts, and (iii) the performance consequences of incorporating non‐financial targets in cash bonus contracts. Results show that powerful CEOs are associated with greater ex‐ante bonus ratios and higher proportions of non‐financial performance targets compared to less powerful CEOs. Furthermore, the use of quantitative and corporate social responsibility (CSR)‐related non‐financial performance targets is positively associated with subsequent firm performance, and the use of undefined non‐financial performance targets is negatively associated with subsequent firm performance. These results are robust to alternative econometric specifications and variable definitions.

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Section: Relevant Literature and Hypotheses Developmentmentioning

confidence: 90%

“…Similar effects have been considered with regard to bonus plans within the UK setting (Cho, Ibrahim, & Yan, 2019).…”

Section: Relevant Literaturementioning

confidence: 94%

Powerful CEOs, cash bonus contracts and firm performance

Bachmann

Loyeung

Matolcsy

et al. 2019

Business Fin & Account

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“…Customized software programs verify all levels of data entry for inconsistencies and errors using a combination of quality control measures (NRG documents). NRG Metrics has been validated in both management and finance literatures (Cho et al, 2019; Delis et al, 2019).…”

Section: Datamentioning

confidence: 99%

Family Business Growth Around the World

Miroshnychenko

Massis

Miller

et al. 2020

Entrepreneurship Theory and Practice

133

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Growth is important for the long-term success of a business. Regrettably, the impact of family influence on firm growth is largely neglected. We examine whether family firms have a higher growth rate than their nonfamily counterparts. Based on a large sample of firms across 43 countries over a 10-year period, we show that family firms on average have higher growth rates than nonfamily firms, and this positive effect is greater for family firms operating in strong national institutional environments which are less corrupt, more democratic, more subject to rule of law, and have effective government policies. We also find that the positive effect of family influence on firm growth varies significantly across different types of family firms and different business cycles. These findings show that family control has an economically significant impact on growth rates and important implications for both family firm theory and practice.

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“…In this study, we stressed the importance of the special committee and only used financial measures in order to judge the strategic choices of the CEO and special committees. In fact, we must fully consider the combination of financial and nonfinancial performance measures when designing executive compensation contracts [27,28]. Furthermore, China famously operates under a dual-class structure.…”

Section: Discussionmentioning

confidence: 99%

Incentive and Supervisory Contract between Special Committees and CEO Based on the Evolutionary Game Model

Zhang

Lin

Wang

2020

Mathematical Problems in Engineering

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The process of CEO incentive and supervision, in which the special committee plays an important role, has always been a hard problem to solve in modern corporate governance. Considering the conflicts of interest between the compensation committee, audit committee, and the CEO, this paper constructed a game model of incentive and supervision within the board of directors and analysed the strategic choices of all three and the influencing mechanisms in different contexts. The results show that there is no totally stable strategy point in the system and that there are different strategy choices in different situations; the CEO’s strategy choice is influenced by both the compensation committee and the audit committee, the incentive strategy of the compensation committee will promote the CEO’s self-interested behaviour, and the supervision strategy of the audit committee is inhibitive. The function of the special committee is dependent on its initial intention and the intensity of action. In the situation of excessive incentive by the compensation committee, the strategy choice of audit committee has periodicity, and the CEO and audit committee have periodic discretionary choice game. This study provides insight into the internal governance of the board of directors, particularly special committees, which create the incentive and supervisory contracts.

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The use of nonfinancial performance measures in CEO bonus compensation

Cited by 39 publications

References 92 publications

Powerful CEOs, cash bonus contracts and firm performance

Powerful CEOs, cash bonus contracts and firm performance

Family Business Growth Around the World

Incentive and Supervisory Contract between Special Committees and CEO Based on the Evolutionary Game Model

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