International Developments in Executive Compensation

• Date: 01 November 2012
• Published date: 01 November 2012
• DOI: http://doi.org/10.1111/j.1467-8683.2012.00934.x
• Author: Brian K. Boyd,Monica Franco Santos,Wei Shen

Guest Editorial

International Developments in

Executive Compensation

Brian K. Boyd*, Monica Franco Santos, and Wei Shen

Executive compensation is a popular topic in both the

popular press and the scholarly literature. During each

proxy season, a recurring debate occurs regarding whether

top executives are over-paid or under-paid, as well as the

best approaches to align the interests of top executives with

those of the f‌irm, stake-, and shareholders. Such debate has

fuelled greater oversight of compensation on a global basis.

In the US, for example, the Troubled Asset Relief Program

(TARP) recipients must follow strict guidelines regarding

the design of compensation packages. Additionally, the US

has seen growing diffusion of clawback provisions, which

are mechanisms to retroactively reduce the compensation of

key executives. The Chinese government has recently placed

restrictions on bonus pay for banking executives; and coun-

tries such as the UK, Australia, and India have seen calls for

curbs on payto top managers. Comparable examples may be

found in a number of other countries.

Academic research on executive compensation mirrors

the prominence of this topic within the business community.

For example, a search using the term “executive compensa-

tion” using ABI Inform yields 24,000 scholarly articles – over

4,000 of these in the last three years alone. Compensation

articles are published in a range of disciplines and special-

ties, including accounting, economics, f‌inance, and manage-

ment. However, one critique of compensation work to date

has been the relative inattention to international aspects of

executive compensation (Gomez-Mejia & Wiseman, 1997).

The goal of this special issue is to advance knowledge

regarding the design and implementation of effective execu-

tive compensation packages, including the relevance of

different approaches across national and cultural contexts.

Additionally, we hope to encourage new research in this

area.

We begin our introduction by providing a brief review of

internationally themed executive compensation studies to

date. We identif‌ied seven prominent outlets for publishing

compensation studies, and then conducted a content analy-

sis of all empirical papers in these journals, which had an

international focus. This review covered the period 1991–

2011.1We brief‌ly summarize norms and trends for interna-

tional executive compensation studies over the last two

decades. Next, this special issue presents both conceptual

and empirical studies that address international aspects of

executive pay. We provide brief descriptions of each of the

articles included in this issue. Finally, we offer some general

suggestions for future research.

CONTENT ANALYSIS OF PRIOR

INTERNATIONALLY FOCUSED

COMPENSATION STUDIES

As a complement to the original articles published in our

special issue, we conducted a content analysis of prior

studies of executive compensation that had an international

focus. Our intent is that a summary of these papers, com-

bined with the papers in the special issue, will help to both

encourage and direct future work in this area.

Since executive compensation is an interdisciplinary

topic, we decided to sample a set of representative journals

from four disciplines: accounting, f‌inance, economics, and

management. We began by identifying leading journals in

each discipline, using ISI impact factors reported in the 2010

Journal Citation Report Social Science Edition. Our journal list

included Journal of Accounting Research,Review of Financial

Studies,Journal of Political Economy,American Economic

Review,Academy of Management Journal, and Strategic Man-

agement Journal. We also included Corporate Governance: An

International Review, given its strong interdisciplinary and

international focus. We then ran electronic searches for a

number of journals in each discipline, using both ABI

Inform, and databases available from various journal

publishers. Our time frame covered articles published

between 1991 and 2011. The search identif‌ied articles where

any of the terms “executive compensation”, “CEO compen-

sation”, “director compensation”, or “board compensation”

*Address for correspondence: Brian K. Boyd Department of Management, College of

Business, City University of Hong Kong, Hong Kong. E-mail: bkboyd@cityu.edu.hk

511

Corporate Governance: An International Review, 2012, 20(6): 511–518

© 2012 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2012.00934.x