The divergence between pressure-resistant and pressure-sensitive institutions with respect to long-term incentives was less marked.
The presence of pressure-resistant institutions increased the proportion of long-term incentive in CEO pay, thus exhibiting influence consistent with shareholder preferences.
However, pressure-sensitive institutions appeared neither to exercise governance to increase long-term incentives nor to get coopt by managers to reduce long-term incentive.
Also, their effect was not significantly different form that of pressure-resistant institutions, suggesting that pressure-sensitive institutions may find it difficult to justify a reduction in long-term incentives.
In recent years, academics have called for an increase in the use of such incentives, arguing that they are important in aligning the interests of managers and shareholders and are far more relevant to shareholders than the level of compensation per se.
The divergence between pressure-resistant and pressure-sensitive institutions with respect to long-term incentives was less marked.The presence of pressure-resistant institutions increased the proportion of long-term incentive in CEO pay, thus exhibiting influence consistent with shareholder preferences. However, pressure-sensitive institutions appeared neither to exercise governance to increase long-term incentives nor to get coopt by managers to reduce long-term incentive.Also, their effect was not significantly different form that of pressure-resistant institutions, suggesting that pressure-sensitive institutions may find it difficult to justify a reduction in long-term incentives.In recent years, academics have called for an increase in the use of such incentives, arguing that they are important in aligning the interests of managers and shareholders and are far more relevant to shareholders than the level of compensation per se.
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