The Effects of CEO Pay Structure on Corporate Social Performance
John R. Deckop, Kimberly K. Merriman, Shruti Gupta
Journal of Management · 2006 · Volume 32 · Issue 3
Abstract
Corporate social performance (CSP) is increasingly viewed as an important business outcome by researchers, investors, and society as a whole. Furthermore, empirical research indicates that CSP is positively related to corporate financial performance. These considerations lead to the question of whether CEO pay is properly structured to provide incentive to the CEO to improve firm CSP. In a sample of 313 firms, the authors found that a short-term CEO pay focus was negatively related to CSP, whereas a long-term focus was positively related to CSP. Implications of these results for future research and CEO pay design are presented.
Keywords
corporate social performance, compensation, incentives, stakeholder theory, agency theory
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