CEO compensation is not merely a governance mechanism; it is a strategic lever that shapes executive behavior and aligns managerial action with corporate objectives. This article develops a comprehensive conceptual framework that integrates agency theory, the resource-based view, and behavioral strategy to explain how diverse compensation structures support distinct competitive strategies: differentiation, cost leadership, and hybrid approaches. Through real-world illustrations, we demonstrate how equity-based incentives foster innovation, cash-based pay reinforces operational efficiency, and hybrid models balance both. We highlight the dangers of misaligned incentives—such as the Wells Fargo and Enron scandals—and emphasize the moderating roles of board independence, CEO duality, and ESG integration. Strategic compensation design demands multi-metric evaluation, dynamic adaptation, and inclusive stakeholder engagement. By positioning CEO pay as a forward-looking strategic instrument, this article offers boards, investors, and policymakers a roadmap for enhancing strategic coherence, long-term value creation, and responsible corporate leadership.
Almost 60% of Americans under 65 are covered by employer-sponsored insurance (ESI) plans, which are becoming increasingly unaffordable. We analyzed data from the 2022 Survey of Income and Program Participation (SIPP) to assess premium and out-of-pocket (OOP) healthcare spending burdens for ESI enrollees across income categories and healthcare spending quintiles. Burdensome spending was ubiquitous across income categories: of the 95 million adults meeting our inclusion criteria, 7.6 million (5 million with incomes ≤400% FPL; 2.6 million with incomes >400% FPL) had premium spending exceeding the 2021 Affordable Care Act (ACA) affordability threshold of 9.83% of income. Considering combined premium and OOP spending, 14.9 million adults (8.2 million with incomes ≤400% FPL; 6.7 million with incomes >400% FPL) had spending exceeding the affordability threshold. The prevalence of burdensome spending rose along spending quintiles. Our findings underscore the need for targeted subsidies and employer-led reforms to alleviate financial strain on Americans across income groups.
The rising demand for greater pay transparency from governments and stakeholders compels a need to understand its repercussions on employee and organizational outcomes. While often presumed to benefit employees, increased pay outcome transparency, in particular, poses potential costs that necessitate careful exploration. Existing studies have focused on a broad variety of visible outcomes like pay dispersion, as well as potential negative consequences such as strained employee relationships and counterproductive work behaviors for those perceiving pay inequity. Given these disparate findings, there is a critical need for a broader conceptual framework to discern when and why transparency may yield adverse organizational outcomes through negative emotions. Drawing on Affect Theory of Social Exchange (ATSE) and incorporating the relatively new concept of undermet pay standing expectations (UMPSE), we highlight the distinct yet overlapping emotional pathways of anger and envy. Specifically, UMPSE-driven anger may give rise to broad retaliatory behaviors, directed both at the organization (e.g., reduced commitment and withdrawal) and at coworkers (e.g., displaced hostility). In contrast, envy produces a more targeted social response, generating retaliatory behaviors primarily toward colleagues through social undermining. By differentiating the broader retaliatory scope of anger from the more interpersonal focus of envy, our model advances understanding of the nuanced emotional dynamics shaping employee reactions to pay transparency. Furthermore, we propose that a positive organizational justice climate should moderate the influence of UMPSE on negative emotions and, in turn, mitigate undesirable behaviors. We discuss the practical implications for mitigating these negative emotions and counterproductive work behaviors.
The population of temporary employees has experienced exponential growth in numerous world regions and across a range of sectors, including the public sector in Indonesia. Temporary employees in the public sector were subjected to more significant pressure than their permanent counterparts, particularly concerning job insecurity and job stress. This study examines the sequential relationship between job insecurity, job stress, compensation satisfaction, and employee loyalty. A cross-sectional design with an online survey method collected data from 631 temporary civil servants in Indonesia. Structural Equation Modeling with Partial Least Square (SEM-PLS) was employed to test the hypotheses using the smart-PLS Program. The results show that job insecurity and job stress experienced by temporary civil servants, directly and indirectly, affect their compensation satisfaction and loyalty. Compensation satisfaction served as a coping mechanism to reduce the adverse direct impact of job insecurity on employee loyalty.
Living wage values are normally calculated using the cost-of-living for a shopping basket, but they can also be seen as a test score threshold for meeting the cost-of-living. Extant research already demonstrates a critical but indeterminate wage range in functions linking (i) wage value to (ii) wage efficiency. This article outlines a protocol for inducting a more precise living wage price-point within that range, that delivers the most efficient marginal return beyond largely inefficient legal Minimum wages. The protocol was pilot tested with a recently archived dataset from a national study of wages and job satisfaction in two waves straddling the COVID-19 pandemic in New Zealand. We find the added precision from applying the protocol (if it had been used to set the living wage at the time), would have made a Just Noticeable Difference (JND) on the pass rate (helped more people to be job-satisfied rather than -dissatisfied).
The job market in many sectors remains tricky. Major events like COVID, inflation, and a large demographic shift of who is participating in the workforce has made it difficult for organizations to attract the talent needed to be successful. The job attributes and programs that organizations are using to attract employees do not seem to be working as well today as in the past. Prior academic research noted that job and cultural fit were the most important characteristics for those seeking jobs; however, little new research has been published on this topic since 2020 and COVID. Through conjoint analysis, this quantitative research study of 300 prospective job applicants examines how job applicants consider and prioritize observable job and recruitment attributes in their evaluation of job opportunities. In this study, we found that compensation and workplace flexibility are the most important attributes that organizations can signal as they work to attract talent, which is a major shift from prior studies. Based on these findings, we offer several practical ideas for how compensation and benefits leaders can strategically use this data to align programs to what those in the job market seek.
This study aims to analyse the impact of managerial compensation on the risk of company stock price crashes, specifically within the Indonesian market. Using OLS regression, it examines how the presence of a remuneration committee influences this relationship. The findings reveal that executive compensation (EXEPAY) significantly reduces the risk of stock price crashes, as measured by NCSKEW and DUVOL, while board compensation (DIRPAY) and total executive and board compensation (EDPAY) have no significant effect. Furthermore, the oversight provided by the remuneration committee strengthens the negative relationship between executive compensation and crash risk, suggesting it helps curb managerial opportunism and mitigate stock price crashes. These results offer valuable insights for investors, highlighting the importance of remuneration committees in shaping compensation practices that support stock price stability. However, the study’s focus on Indonesia may limit the generalizability of its findings to other countries or contexts.
The focus on attracting retaining, engaging, and rewarding talent with critical skills will only increase in the rapidly changing world we are living in. Organizations are in the best position to thrive when they understand, build out, and leverage the promise of skills-based reward. This article lays out the value proposition and framework for skills-based reward, the challenges inherent in this area and areas to focus on for successful implementation. Skills-based reward applications cover the following: (1) Hiring talent based on skills. (2) Use of job architecture and job leveling processes that utilize skills. (3) Use of career architecture processes that leverage skills. (4) Performance management processes that utilize skills. (5) Base salary increase and pay promotion systems based on skills.
The article analyzes a hedge fund manager fraud case to develop the argument for expanding the fiduciary duty standard to include the disclosure of acts believed harmful by hedge fund vendors to investors and hedge fund stakeholders. The disclosure to be made at three levels: Within vendor firm, among third-party vendors, and to regulatory agencies, private and public. The requirement is likely to mitigate hedge fund manager fraud and reduce adverse consequences of the fraud such as financial losses to employee retirement plans and other investors and expensive needless lawsuits filed against hedge funds and their service providers. Extending the application of the standard of fiduciary duty to hedge fund service providers is critically important considering that the SEC just lost more than 10% of its staff because of the administration's plan to reduce the size of the government. Article offers responses to arguments against applying the standard of fiduciary duty to hedge funds service providers.
Introduction: Perceived green reward is a significant driver of work engagement to ensure eco-friendly behaviour and optimal performance of employees in the workplace. Purpose: This study investigates the significance of the relationship between perceived green reward and work engagement among employees. Study design/methodology/approach: The study used a cross-sectional survey research design with 140 random participants. The data was analysed using exploratory factor analysis (EFA) and the hypothesis was tested using structural equation modelling (SEM). Findings: The findings of the analysis revealed that perceived green reward has a significant effect on work engagement. Research recommendation: There should be an effective workplace policy on the green reward to promote and engage eco-friendly behaviour among the organisation’s workforce. Originality/value: This research builds on the existing literatures and contributes to the limited study of using the perceived green reward as antecedents of work engagement in Nigeria’s workplace.
This paper analyzes the ethics of executive compensation governance in large UK publicly quoted companies. It combines content analysis of Financial Times Stock Exchange 100 (FTSE-100) remuneration committee reports with interviews with key decision-makers. A framework from business ethics and corporate governance literature helps understand the factors shaping this governance. Maintaining public trust requires aligning with societal norms and regulatory compliance. Findings indicate growing awareness of ethical considerations among decision-makers and highlight the need for a more holistic, values-based approach that strengthens stakeholder inclusivity. Interviews with decision-makers reveal challenges in translating ethical principles into practice. Governance mechanisms intended to align executive and shareholder interests face limitations, and perceived unfairness in executive rewards persists. This paper applies theory to analyse the interplay of external and internal factors shaping executive compensation governance, develops practical recommendations for enhancing its effectiveness and integrity, and provides a heat map tool to compare organisations’ ethical principles.
This paper evaluates the use of third-party environmental, social, and governance (ESG) ratings as key performance metrics within executive and management compensation plans. Despite a widespread increase in ESG-linked compensation practices, there remains a paucity of research critically evaluating the use of third-party ESG ratings as meaningful performance metrics in this context. The paper utilises case-studies from the airline and banking industries to identify this emerging trend of ESG ratings-linked compensation. It goes on to synthesise extant research on ESG ratings to evaluate their suitability as performance metrics within the context of the broader executive compensation literature. We argue that the substantial evidence on the shortcomings of current ESG ratings, including divergence across rating agencies, opaque rating methodologies, and inadequate reflection of actual impact metrics, combine to present a material risk to the credibility and reviewability of such sustainability-linked compensation plans. Our critique highlights the ready potential and incentive for manipulation, where executives may influence the selection of ratings or utilise strategic disclosure tactics to achieve improved rating targets. We advise that companies and their boards prioritise objective measures of impact over existing third-party ratings when designing executive compensation criteria. We offer actionable recommendations for firms to adopt verifiable metrics aligned with their strategic objectives, drawing on frameworks provided by legislation such as the Corporate Sustainability Reporting Directive (CSRD) and voluntary standards including the Global Reporting Initiative (GRI). By doing so, companies can foster transparency and maintain shareholder trust and confidence while effectively incentivising management to deliver on key sustainability challenges.
Human capital is crucial for sustainable competitive advantage, and certain workforce groups have a greater impact than others. The top management team, responsible for directing firm strategy and structure, is one such group, and executive turnover can be detrimental for a firm. While existing literature often suggests that executives change jobs primarily for higher pay, this is not always true. Drawing on human capital research and the geographic preference theory, we examine how an executive’s human capital and geographic preferences affect changes in compensation during job transitions. Using a sample of 351 executives who moved among S&P 500 companies from 2000 to 2015 (378 inter-organizational moves), we find that education (a proxy for human capital) and area desirability (a proxy for geographic desirability) correlate with changes in executive compensation. Additionally, a higher density of geographically proximal executive pay packages increases an executive’s compensation premium when changing jobs. Keywords executive compensation , geographic preference , human capital , executive mobility , top management teams
In today’s dynamic environment, traditional business models often fall short. This study focuses on Nigerian private education, emphasizing human capital as a driver of competitive advantage. It examines how well-designed compensation practices foster affective commitment, cultivate an ethical climate, and enhance dynamic capabilities. The research highlights the role of equitable rewards in promoting emotional attachment, loyalty, and positive work attitudes while addressing the overlooked link between compensation and ethical business practices. By integrating these elements, the study explores how dynamic capabilities enable organizations to adapt and thrive amidst challenges. Using structural equation modeling, the findings reveal that dynamic capabilities not only directly influence affective commitment and ethical climate but also amplify the impact of strategic compensation on staff dedication. The study offers actionable insights to help Nigerian private schools build a committed, high-performing workforce, paving the way for long-term success in an increasingly competitive landscape.
Pay transparency has drawn substantial attention from scholars in recent years, resulting in an expanding body of knowledge on this important topic. However, the literature has developed in a fragmented manner with an array of labels and conceptualizations across several largely disconnected dimensions. Pay transparency measurement scales have also emerged in a piecemeal fashion and lack cohesion in the operationalization of pay transparency dimensions. The current research develops a more cohesive and comprehensive multi-dimensional pay transparency framework and measurement scale. The paper reviews and integrates the pay transparency literature into a coherent, multi-dimensional framework founded on employee awareness perceptions of pay information rather than on objective organizational actions or employee behaviors. Following established scale development techniques, the present study creates and validates a multi-dimensional pay information awareness scale that may serve to facilitate future research on pay transparency. Implications are discussed, along with limitations and directions for future research.
This study examines marketing managers’ decision-making processes when initiating, conducting, or terminating a failed marketing campaign, focusing on the interplay between market data, compensation, personal motivations, and cognitive biases. We conduct qualitative interviews with marketing managers in various industries to explore their experiences with unsuccessful marketing campaigns. Our findings reveal a multifaceted decision-making landscape in which marketing managers must weigh empirical data against compensation and cognitive bias. There are 4 phases of a typical unsuccessful marketing campaign: Aspiration, recognition of failure, professional self-doubt, and recovery. This study demonstrates that unrealistic compensation aspiration can significantly sway decisions, often at the expense of objective data. Furthermore, making the wrong decision can result in severe psychological repercussions, affecting not only managers’ lives but also impacting their families. The study contributes to the literature by articulating the multifaceted nature of marketing decision-making and proposing a balanced approach that accommodates both rational and emotional factors. By recognizing the influence of personal motivations and cognitive biases, this study emphasizes the importance of developing decision-making tools that integrate emotional intelligence with data-driven insights.
Health Savings Accounts (HSAs) have been around for two decades, with record funds accruing in accounts year-after-year. Despite this growth, little is known regarding how well consumers know what they can spend their HSA funds on to maximize their accounts’ tax advantages. A survey of HSA savers at a large Midwest organization ( n = 732) found that about 1-in-4 employees (29.1%) were unsure or did not know their HSA contributions were not federally taxed. Additionally, employees knew that fewer than half of items asked about (M = 4.71) on a 10-item HSA-eligible quiz could be purchased with HSA funds. Employees had the least awareness that hand sanitizer (22.5%), sunscreen (27.2%), and menstrual care products (33.1%) could be purchased with HSA funds. Knowledge or perceptions did not differ based on employee education level, indicating that HSAs are likely a complicated topic for anyone to fully comprehend. These findings showcase a need to develop more effective communication to help employees better understand the unique benefits HSAs can provide. Additional recommendations for employers are provided.
