Joachim Schwalbach

Executive Compensation: Evidence from the UK and Germany

This article concerns the determination of executive pay in the UK and Germany. These economies have very different corporate governance structures and we examine whether this has implications for executive pay outcomes. Our research shows that average pay in the UK was about £391,000 in 1994, compared to about £200,000 in Germany. Our data, however, have a time series dimension. Pay has increased in both economies over time, but the UK has had a faster rate of growth in the post-1980s period. Importantly, in our time period each economy had a different structure of pay: UK CEOs received stock options (which can contribute to the growth rate) whereas German executives—until recently—did not. The gap between CEO pay and that of other employees is higher in the UK than in Germany. Regression results reveal a positive and significant association between cash pay and company performance in both countries. However, we show that there is cross-section variation in the pay-performance relation, a result that many prior studies have overlooked.

Managervergütung und Unternehmenserfolg

Die Agency-Theorie verweist darauf, das die Trennung von Eigentum und Kontrolle in Unternehmen zu einem Interessenskonflikt fuhren kann, wenn Informationsasymmetrien und opportunistisches Verhalten beobachtet werden. Gleichzeitig bildet die Agency-Theorie den theoretischen Bezugsrahmen fur die empirische Analyse der Vergutung von Top-Managern. Dabei stehen die Ermittlung der Vergutungselastizitaten in Bezug auf den Unternehmenserfolg und die Unternehmensgrose im Mittelpunkt. Der Beitrag knupft an die Tradition anglo-amerikanischer Vergutungsstudien an und soll zeigen, ob die Analyse der auf Konsensbildung ausgelegte Unternehmensverfassung deutscher Unternehmen andere Ergebnisse hervorbringt als Studien, in denen das amerikanische Board-Modell mit einem dominanten Chief Executive Officer (CEO) zugrunde lag. Die empirische Analyse basiert auf zwei sehr unterschiedlichen Datensatzen und kommt zu ahnlichen Ergebnissen wie internationale Studien, wonach die Managervergutung von der Unternehmensgrose und von Brancheneffekten stark beeinflust wird. Demgegenuber uben die Gewinn- und Marktwertraten nur einen sehr geringen Einflus aus. Die Ergebnisse bestatigen die vorherrschende Ansicht, wonach die Vergutungsstrukturen des Top-Managements zu wenig leistungsorientiert ausgerichtet sind.

Small business in German manufacturing

In recent years, one observes a renaissance of small business research efforts. The stimuli came from different directions. One strand of more policy oriented research concentrated on the impact of small businesses on the creation of new employment opportunities.1 Another host of studies paid attention to the relationship of innovation productivity of small versus large business.2 And industrial economics research examined the role of small businesses as actual and potential challengers of larger competitors in a given market.3 Whatever motive guided this research, it was emphasized that the cumulated knowledge about large business behavior is by far greater than about their small business counterparts.

European Differences in Executive Pay and Corporate Governance

Executive pay and corporate governance issues continue to attract wide academic, media and policy attention. The very high salaries enjoyed by senior executives in corporations in some economies are often contrasted with the relatively low pay received by executives in other economies. The case of the United states (high CEO pay) and Japan (low CEO pay) is an obvious example.

Small business dynamics in Europe

This paper examines how the firm-size distribution has shifted over the last two decades across a broad spectrum of European countries. The evidence suggests that a shift away from large firms and towards small business has taken place, particularly is the southern regions and in the high technology indutries.

Corporate governance, executive pay and performance in Europe

Executive pay and corporate governance issues continue to attract wide academic, media and policy attention.1 The very high salaries enjoyed by senior executives in corporations in some economies are often contrasted with the relatively low pay received by executives in other economies. The case of the USA (high CEO pay) and Japan (low CEO pay) is an obvious example. At the same time, the stark differences in the corporate governance structures between such economies is often highlighted. For instance, the governance system in the USA and UK (which stress the market for corporate control as a means of correcting managerial failure) is compared with the German and Japanese system (which stress long-term commitment). There is an implicit assumption that these alternative systems of corporate control and governance may result in quite different economic outcomes and in particular patterns of executive pay.

Corporate Communications from the Top and from the Center: Comparing Experiences and Expectations of CEOs and Communicators

Common viewpoints as well as divergences between top executives and communication professionals influence the institutionalization of strategic communication. However, there is little empirical evidence on the accordance between both groups. Most research explores either communication professionals or chief communication officers (CEOs). Very few studies have combined both perspectives. This article identifies the research gap, explores insights from previous research, and contributes to the body of knowledge in strategic communication with an original study that is based on two surveys with replies from 602 CEOs and executive board members as well as 1,251 communication managers from companies in the largest European country, Germany. Although top executives rate the information and motivation of employees as the most important objective of corporate communication, communication professionals focus on the creation of a positive image. Respondents from both groups also state different opinions about dealing with the demand for transparency. Both top executives and communicators give most support to a role model that describes communication professionals as a facilitator between an organization and its publics. Nevertheless the overall conclusion is that perspectives diverge quite often and attention should be directed towards a better alignment between top management and those leading the strategic communication function.

Der Ehrbare Kaufmann als individuelle Verantwortungskategorie der CSR-Forschung

Im Juni 2003 hielt Horst Albach im Wissenschaftszentrum Berlin einen Vortrag mit dem Titel „Zuruck zum ehrbaren Kaufmann“, den er mit einem Zitat des deutschen Unternehmers Jurgen Heraeus schloss und ihm anschliesend zustimmte: „Der ehrbare Kaufmann braucht keinen Kodex guter Corporate Governance“.

Corporate Governance und Corporate Citizenship

Corporate Governance und die gesellschaftliche Verantwortung von Unternehmen sind zwei Themenbereiche, die sowohl die Wissenschaft als auch die allgemeine Offentlichkeit stark beschaftigen. Nahezu taglich wird aus diesen Bereichen in den Medien berichtet. Es fallt auf, dass im Zuge der Debatte zum Fur und Wider der Globalisierung, die gesellschaftliche Rolle der Unternehmen zunehmend in den Mittelpunkt der offentlichen Diskussion geruckt wird. Befordert wird dies durch gewichtige Medienberichte wie beispielsweise durch den Beitrag „Good Company“ im britischen Economist und durch Umfragen bei CEOs namhafter Unternehmen. Einer McKinsey-Studie zufolge sind 84 Prozent der 4238 befragten CEOs aus 116 Landern der Meinung, Unternehmen sollten eine Balance zwischen ihrer Verantwortung gegenuber den Shareholdern und der Gesellschaft herstellen (vgl. McKinsey 2006).

Management Quality, Firm Size, and Managerial Compensation: A Comparison between Germany and the UK

This paper considers the relation between management quality, firm size, and managerial compensation. Exploring a German (SOEP) and a British (BHPS) data set we show that the impact of firm size on pay, which is consistently found in the management literature, vanishes (to a large extent) if it is controlled for manager quality. For the UK, we even find negative firm size elasticities. Different corporate governance systems may explain that in Germany the pay/firm size relation can only be partially explained by management quality measures. The impact of manager quality on firm size appears predominantly in the stochastic individual effects. Only for the German sample is the education/firm size-relation significant. Whether this surprising result is due to measurement problems deserves further attention.