Strategy and managers' compensation: the Spanish case

Abstract

The compensation of managers is not a new topic; nevertheless, it is a field that is far from exhausted. In this context, our study is situated within the new trend of seeking non-economic explanations for the compensation of senior management. Specifically, our intention is to integrate agency theory with the contingent perspective. From among the various situational factors that could be taken into account, we have taken the strategy of the organization, which is considered to be the principal contingent factor. The main argument of our study is that the closer the fit between the compensation of the top management and the strategy of an organization, the better will be the business results of that organization. The review of theory will enable us to formulate a set of hypotheses referring to the relationship between the generic strategy and the compensation strategy. In the empirical research, taking a set of Spanish companies, we check these hypotheses. In the treatment of the information obtained, use was made of descriptive statistics, the testing of hypotheses and cluster analysis. In the last part of the paper, we present our conclusions, among which the difference in the behaviour shown by the Spanish companies is emphasized