Sylvie St-Onge

Bank performance and executive compensation : A managerial discretion perspective

This study investigates how the relationship between bank performance and executive compensation is affected by the degree of an executives managerial discretion. Managerial discretion is captured by two industry-specific attributes: a banks strategic domain, and its regulatory environment. Executive compensation is found to be more related to bank performance in a context of high managerial discretion than in a context of low managerial discretion. ? 1997 by John Wiley & Sons, Ltd. In recent years, the relationship between firm performance and executive compensation has increasingly come under the scrutiny of stockholders, analysts and regulatory agencies, such as the Securities and Exchange Commission (SEC). While performance-based executive compensation is prescribed by agency theory (Jensen and Murphy, 1990) as well as by strategic management considerations (Balkin and Gomez-Mejia, 1987; Zajac, 1990), empirical evidence justifying it is weak at best (see Pavlik, Scott, and Tiessen, 1994, for a review).

Performance management effectiveness: practices or context?

Although much research has focused on the technical or measurement issues involved in employee performance management, this study investigates the mutual influence of practices and context on performance management effectiveness. From a sample of 312 private and public sector organizations with 200 or more employees, the results indicate positive associations between practices – training and employee recognition – and performance management effectiveness. They further underscore the relevance of three contextual variables – culture, climate and the strategic integration of human resource management – as they are also related to more positive performance management outcomes. Implications for research and practice are discussed.

VARIABLES INFLUENCING THE PERCEIVED RELATIONSHIP BETWEEN PERFORMANCE AND PAY IN A MERIT PAY ENVIRONMENT

The purpose of the study is to gain a better understanding of the “pay-for-performance” perception. Such a knowledge may allow for improvement in the effectiveness of incentive compensation plans. Sample comprises 406 employees whose salary changes were conditioned by a merit pay plan. Results suggest that pay-for-performance perception is related to the actual pay-for-performance link, their trust in decision-makers, their procedural justice perception, the size of their outcomes—that is, pay increase and performance rating—and their satisfaction with these outcomes.

The adoption and success of profit‐sharing plans in strategic business units

Purpose – To provide insights as to the determinants of profit‐sharing plan (PSP) adoption, as well as conditions that underlie their successful implementation.Design/methodology/approach – The sample comprises strategic business units (SBUs) within a large financial services organization, some of which voluntarily adopted a PSP while others did not. All sample SBUs face similar economic and market conditions. Through a logit analysis, we identify determinants of PSP adoption. Through longitudinal cross‐sectional design, we assess the impact of PSP adoption on earnings growth, as well as conditions that underlie successful implementations.Findings – Larger SBUs as well as SBUs exhibiting superior asset growth are more likely to adopt a PSP than other SBUs. Prior earnings performance is not found to be a determinant of PSP adoption. PSP adoption translates into superior earnings growth, but such impact quickly declines over time. Among PSP adopters, earnings growth following PSP adoption is greater for SBU...

CEO target compensation and performance standards in privately- and publicly-held firms through a disclosure regulation change

In this paper, the authors investigate whether CEOs from publicly-traded firms have higher target bonuses, higher target total cash compensation and smoother abnormal bonuses than CEOs in private firms. The authors also analyse the impact of disclosure regulation on performance standards that boards set for CEOs of both publicly-traded and private firms. Relying on samples containing both publicly-held and privately-owned firms, the authors show that the advent of mandated disclosure of executive compensation has imposed an additional compensation cost upon the shareholders of publicly-held firms without necessarily leading managers to achieve higher performance standards. The results suggest that executive compensation determination may reflect, beyond agency, managerial power and rent extraction considerations, both institutional (impression management) and governance pressures.