BOARDS OF DIRECTORS COMPENSATION ALTERNATIVES

Authors

  • Ivana Marinković-Matović HYPO Alpe-Adria-Bank, Belgrade, Serbia
  • Miloš Marinković Zavod za urbanizam Niš

Keywords:

Board of Directors, Compensation, Incentive, Shareholders

Abstract

Directors, members of the Boards of Directors, have a fiduciary duty to protect shareholders’ interests. Yet, their interests are unlikely to be perfectly aligned with the shareholders’. Like all economic actors, directors may be presumed to prefer greater wealth to less wealth; hence, they should be responsive to financial incentives. Companies routinely use a variety of such incentives including additional fees for attending meetings, stock and option grants, and performance bonuses. Besides direct compensation, there are other motivations that could affect director behavior. A possible motive is the concern that directors have for being seen as able business people. A strong reputation is likely to be important in the market for getting more board seats or retaining the ones already held.

Downloads

Download data is not yet available.

References

1. Adams, R.B. et al. (2010). The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey. Journal of Economic Literature, 48:1, 58–107
2. Brick, I. et al. (2002). CEO compensation, director compensation, and firm performance: Evidence of cronyism. Rutgers Business School Working Paper.
3. Fama, E.F. (1980). Agency Problems and the Theory of the Firm. Journal of Political Economy , 88(2): 288–307.
4. Fich, E.M. and A. Shivdasani (2007). Financial Fraud, Director Reputation, and Shareholder Wealth. Journal of Financial Economics, 86(2): 306–36.
5. Gilson, S.C. (1990). Bankruptcy, Boards, Banks, and Block holders: Evidence on Changes in Corporate Ownership and Control When Firms Default. Journal of Financial Economics, 27(2): 355–87.
6. Kaplan, S.N. and D. Reishus (1990). Outside Directorships and Corporate Performance. Journal of Financial Economics, 27(2): 389–410.
7. NACD - The National Association of Corporate Directors. (2001). Board Evaluation: Improving Director Effectiveness, www.nacdonline.org. (28.10.2010.)
8. NACD - The National Association of Corporate Directors. (2005). Director Compensation Report, www.nacdonline.org. (28.10.2010.)
9. Ryan, H. and R. Wiggins (2004). Who is in whose pocket? Director compensation, board independence, and barriers to effective monitoring. Journal of Financial Economics, 73, 497-524.
10. Yermack, D. (2004). Remuneration, retention, and reputation incentives for outside directors. Journal of Finance, 59, 2281-2308.

Downloads

Published

2010-12-29

How to Cite

Marinković-Matović, I., & Marinković, M. (2010). BOARDS OF DIRECTORS COMPENSATION ALTERNATIVES. BizInfo (Blace) Journal of Economics, Management and Informatics, 1(2), 151–160. Retrieved from http://bizinfo.edu.rs/index.php/bizinfo/article/view/103