Explaining Executive Pay: The roles of managerial power and complexity - Softcover

Hengartner, Lukas

Softcover

ISBN 10: 3835005618 ISBN 13: 9783835005617

Publisher: Deutscher Universitätsverlag, 2006

Synopsis

The idea of studying executive pay was born in a lecture on option valuation in spring 2002 at the Norwegian School of Economics and Business Administration NHH. At that time, I started wondering how companies that had granted large amounts of stock options to their executives would react to the sharp decreases in share prices that could be observed since 2000. Based on this interest, I wrote my NHH master thesis about "Employee stock options and falling share prices" investigating a sample of Norwegian IT companies. These companies were especially likely to both have granted substantial amounts of options and suffered from severe declines in share prices. The topic of executive pay continued to attract my interest, mainly because I felt that it offered opportunities to make a real contribution to academic researchers and policy makers alike. In summer 2002, I wrote my master thesis at the University of St. Gallen HSG. I investigated the determinants of executive stock option plan adoptions of Swiss sto- listed companies. Major results were that both large outside shareholders and CEO duality influenced whether companies would adopt stock option plans. At that time, very little information about executive pay was disclosed in Switzerland. However, the Swiss Stock Exchange SWX issued new listing guidelines that required companies to disclose detailed information on Corporate Governance starting from the annual report 2002 to be published in 2003.

About this title

About the Author

Dr. Lukas Hengartner promovierte bei Prof. Dr. Winfried Ruigrok an der Universität St. Gallen. Er ist Assistent der Geschäftsleitung bei der ABB Schweiz AG.

From the Back Cover

The pay of corporate leaders has escalated in the last few decades. At the same time the number of research papers on this issue has soared. Despite an impressive research volume, however, many questions concerning executive compensation remain unsolved.

Lukas Hengartner develops broad concepts for managerial power and firm complexity and empirically tests the influence of these concepts on executive compensation for a large sample of Swiss stock-listed companies. As the jobs of some managers are more complex and demanding than others, these CEOs may command a pay premium in the managerial labor market. It has also been argued that top managers have the power to influence their own compensation. The author shows that both firm complexity and managerial power are associated with higher pay levels. This suggests that top managers are paid for the complexity of their job and that more powerful top managers receive pay in excess of the level that would be optimal for shareholders.

Edition details

• Publisher: Deutscher Universitätsverlag
• Publication date: 2006
• Language: English
• ISBN 10: 3835005618
• ISBN 13: 9783835005617
• Binding: Paperback
• Number of pages: 230