Executive pay in the Netherlands has risen sharply in recent years as equity-based compensation grows and boards increasingly adopt the pay-for-performance approach.
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2.
Berle, A.A., & Means, G.C. (1932). The modern corporation and private property. New York: Macmillan.
3.
Jensen, M.C. , & Meckling, W.H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360.
4.
Ang, J.S., Cole, R.A., & Wuh Lin, J. (2000). Agency costs and ownership structure. Journal of Finance, 55(1), 81-106.
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Shleifer, A. , & Vishny, R.W. (1986). Large shareholder and corporate control. Journal of Political Economy, 94(3), 461-488.
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Rappaport, A. (1978). Executive incentives vs. corporate growth. Harvard Business Review, 56(4), 81-88.
7.
Eisenhardt, K.M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57-74.
8.
Jensen & Meckling (1976).
9.
Equity-based compensation are all pay elements of which the payout is subject to stock price performance. Stock options and (performance) shares are the prime examples of equity-based compensation.
10.
Eisenhardt (1989).
11.
Hart, O. (1995). Corporate governance: Some theory and implications . Journal of Economic Perspectives, 105(43), 678-689.
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Jensen, M.C. (1993). The modern Industrial Revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831-880.
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Jensen, M.C. (1986). Agency costs of free cash flow, corporate finance and take-overs. American Economic Review, 76, 323-329.
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Fama, E.F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288-307.
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Fama, E.F., & Jensen, M.C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-325.
16.
Tabaksblat Committee. (2003). The Dutch Corporate Governance Code: Principles of good corporate governance and best practices provisions. The Hague, the Netherlands: Author.
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Hamilton, B.A. (2003). CEO succession 2003: The perils of good governance. New York: Booz Allen.
18.
Europe's Enron—Ahold's Shocking Accounting. (2003, March 1). The Economist.
19.
See http://www.commissiecorporategovenance.nl.
20.
See http://www.fsa.gov.uk/pubs/ukla/lr_comcode.pdf .
21.
It states that “the notes enclosed in the annual accounts have to contain complete and detailed information on the amount and structure of the remuneration of the individual members of the management board.” The source is the Dutch corporate governance code: Principles of good corporate governance and best practice provisions (p. 10, article II.2: Remuneration Amount and composition of the remuneration).
22.
The Monitoring Committee was installed to review the compliance to the code and the topicality and usefulness of the principles (See http://www.commissiecorporategover nance.nl/De%20Monitoring%20Commissie).
23.
Wade, J.B., Porac, J.F., and Pollock, T.G. (1997). Worth, words, and the justification of executive pay. Journal of Organizational Behaviour, 18, 641-664.
24.
Westphal, J.D. , & Zajac, E.J. (1994). Substance and symbolism in CEOs' long-term incentive plans. Administrative Science Quarterly,39, 367-390.
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Jensen, M.C., & Murphy, K.J. (1990). Performance pay and top management incentives . Journal of Political Economy, 98(2), 225-265.
26.
Hall, B.J., & Liebman, J.B. (1998). Are CEOS really paid like bureaucrats?Quarterly Journal of Economics, 113(3), 653-691.
27.
Stock option plans in general have larger performance-pay sensitivity than do performance share plans. Because performance share plans often replace existing stock option plans in the pay package, it makes sense that the pay-performance relationship subsequently declines.
28.
Buck, T., Bruce, A., Main, B.G.M., & Udueni, H. (2003). Long term incentive plans, executive pay and UK company performance. Journal of Management Studies, 40(7), 1709-1728.
29.
Jensen & Meckling (1976).
30.
Abowd, J.M. (1990). Does performance-based managerial compensation affect corporate performance? Industrial and Labor Relations Review, 43, 52S-73S.
31.
Palia, D. (2001). The endogeneity of managerial compensation in firm valuation: A solution. Review of Financial Studies, 14(3), 735-764.
32.
Core, J.E., & Guay, W.R. (2003). When contracts require risk-averse executives to hold equity: Implication for option valuation, for relative performance evaluation, and for the corporate governance debate. Working paper, University of Pennsylvania, Philadelphia.
33.
Abowd, J.M. , & Kaplan, D.S. (1999). Executive compensation: Six question that need answering. Journal of Economic Perspectives , 13, 145-168.
34.
Morck and colleagues35 (1988) find that the pay-performance relationship is negative between an ownership of 5% and 25%, whereas McConnell and Servaes35 (1990) find that this negative relationship does not start until 50%.
35.
Morck, R., Shleifer, A., & Vishny, R.W. (1988). Management ownership and market valuation: An empirical analysis. Journal of Financial Economics, 20, 293-315.
36.
McConnell, J., & Servaes, H. (1990). Additional evidence on equity ownership and corporate value. Journal of Financial Economics, 27, 595-612.
37.
Core, J.E., & Larcker, D.F. (2002). Performance consequences of mandatory increases in executive stock ownership. Journal of Financial Economics , 64, 317-340.
38.
Gomez-Mejia, L., & Wiseman, R.M. (1997). Reframing executive compensation: An assessment and outlook. Journal of Management , 23(3), 291-374.
39.
Jensen & Meckling (1976).
40.
Beatty, R.P. , & Zajac, E.J. (1994). Managerial incentives, monitoring, and risk bearing: A study of executive compensation, ownership, and board structure in initial public offerings. Administrative Science Quarterly,39(2), 313-335.
41.
Gray, S.R., & Cannella, A.A. (1997). The role of risk in executive compensation. Journal of Management, 23(4), 517-540.
42.
May, D.O. (1995). Do managerial motives influence firm risk reduction strategies?Journal of Finance, 50(4), 1291-1308.
43.
Bloom, M., & Milkovich, G.T. (1998). Relationships among risk, incentive pay, and organizational performance. Academy of Management Journal, 41(3), 283-297.
44.
Beatty, R.P. , & Zajac, E.J. (1994). Managerial incentives, monitoring, and risk bearing: A study of executive compensation, ownership, and board structure in initial public offerings. Administrative Science Quarterly,39(2), 313-335.
45.
Kren, L., & Kerr, J.L. (1993). The effects of behavior monitoring and uncertainty on the use of performance-contingent compensation. Accounting andBusiness Review, 23(90), 159-168.
46.
Gray & Cannella (1997).
47.
McKnight, P.J. , Tomkins, C., Weir, C., & Hobson, D. (2000). CEO age and top executive pay: A UK empirical study. Journal of Management and Governance , 4, 173-187. 48. Eisenhardt (1989).
48.
Ouchi, W.G. (1979). A conceptual framework for the design of organizational control mechanisms. Management Science, 25(9), 833-848.
