Le CRÉ est heureux de recevoir Dominic Martin (Organisation et ressources humaines, UQAM), qui, en marge du groupe de travail sur la rémunération des dirigeants d’entreprise, nous offrira une présentation intitulée « Is Executive Compensation Just or Unjust? An Efficiency Perspective ».
The justification underlying most executive compensation packages is that, by providing sizable rewards for good performance, incentive plans (both cash-based such as bonuses or equity-based such as stock option or share awards) are conducive to executives making the decisions and taking the actions that will ultimately translate into value creation in the market. Such a definition of just executive compensation reflects an efficiency view that is quite widespread in governance circles. Our analysis purports to revisit the conceptual and empirical underpinnings of the efficiency view of executive compensation by adopting a societal perspective. Conceptually, it is hard to claim unequivocally that actual levels of executive compensation are justified on the basis of efficiency. Empirically, evidence drawn from macro-economic data suggests that high levels of executive compensation, which are driven by performance-based incentives, do not appear to produce expected economic outcomes in terms of firms’ efficiency. For instance, rising executive compensation in the Anglo-Saxon countries (United States, United Kingdom, Canada, Australia and New Zealand) since the mid-1970s does not correlate with a rise in gross domestic product (GDP) per capita. In addition, productivity growth has stalled in most Western economies since the beginning of the current century. We conclude by raising and discussing alternative explanations.