Abstract
Executive compensation has long been a lightening-rod of interest in the popular press and frequently makes the headlines. It seems that everyone has an opinion on the subject, with most demanding an end to inflated compensation packages. Depending on whether you are a member of the C-suite or not will likely skew your opinion on the matter. Given that the CEO is the most visible manifestation of the company to the outside world it is common to fixate on the way in which they are being compensated. However, after all of the research that has been conducted, we are still not sure about what factors determine a business executives’ pay. The present study seeks to add to the extant literature on the subject of CEO compensation by introducing a couple of promising new variables: corporate reputation and sustainability. It is argued that since the CEO is the face of the organization that he/she will be compensated based on how well they manage the firm’s reputation overall and its “environmental footprint” in particular.
Highlights
In a play on words from the classic English play by Oscar Wilde, The importance of Being Earnest, the question of whether it pays to be green and sustainable is an important one
Descriptive statistics and simple correlations suggest that all three measures of CEO compensation were positively and significantly associated with corporate reputation, indicating that CEOs of firms with more positive reputations receive more compensation than CEOs of firms with less positive reputations
In all of the models estimated the results indicate that a positive reputation is associated with greater CEO remuneration
Summary
In a play on words from the classic English play by Oscar Wilde, The importance of Being Earnest, the question of whether it pays to be green and sustainable is an important one. The salient point of this reference is: Are CEOs, as the face of the company, being „earnest‟ in their commitment to sustainability? Are they merely playing the part of Ernest, as the alter ego of Jack Worthing in Ocar Wilde‟s play “The Importance Of Being Earnest”? What is the relationship between a firm‟s actions when it comes to sustainability and CEO remuneration? Are CEOs being duly compensated for their sustainability efforts? The salient point of this reference is: Are CEOs, as the face of the company, being „earnest‟ in their commitment to sustainability? Or, are they merely playing the part of Ernest, as the alter ego of Jack Worthing in Ocar Wilde‟s play “The Importance Of Being Earnest”? So, what is the relationship between a firm‟s actions when it comes to sustainability and CEO remuneration? Are CEOs being duly compensated for their sustainability efforts?
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