Logo Logo

Accounting for the Explanations of CEO Compensation: Substance and Symbolism, Administrative Science Quarterly

Abstract

While current debates about CEO compensation have generally been dominated by economic and political perspectives on CEO/board relations, we argue in this paper that CEO compensation may be driven by symbolic as well as substantive considerations. We develop an interdisciplinary theoretical framework to (1) explain why alternative explanations rooted in agency and human resource logics may be used to reduce ambiguity surrounding the adoption of new incentive plans for CEOs and (2) identify the possible structural (e.g., institutional, demographic, and economic), and interest-based (e.g., political) factors influencing the use of such explanations. We generate and test hypotheses predicting the alternative explanations for new long-term incentive plans using data taken from proxy statements over a 15-year period. The findings support the notion that explanations for CEO compensation reflect both substance and symbolism.

Type

Article

Author(s)

Edward Zajac, James D. Westphal

Date Published

1995

Citations

Zajac, Edward, and James D. Westphal. 1995. Accounting for the Explanations of CEO Compensation: Substance and Symbolism. Administrative Science Quarterly. 40(2): 283-308.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more