The Role of Institutional Investors in the Sustainable CEO Compensation Structure

Kyoungwon Mo, Kyung Jin Park and YoungJin Kim
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Kyoungwon Mo: School of Business Administration, Chung-Ang University, Seoul 06974, Korea
Kyung Jin Park: College of Business Administration, Myongji University, Seoul 03674, Korea
YoungJin Kim: College of Business, Hawaii Pacific University, Honolulu 96813, HI, USA

Sustainability, 2019, vol. 11, issue 19, 1-21

Abstract: Chief executive officer (CEO) retirement pension plans are known as sustainable compensation because they induce managers to make more sustainable and long-term-oriented corporate decisions. We focused on the role of institutional investors in awarding CEO pension plans. Long-term and short-term institutional investors are expected to increase and decrease the CEO pension plan, respectively, wherein the former is aimed at persuading the manager to focus more on the firm’s long-term performance and the latter is aimed at making the CEO assume more risk. We empirically tested our hypothesis and found significantly negative (positive) relationship between short-term (long-term) institutional ownership and CEO pension plans, which is consistent with our hypothesis. Our results suggest the institutional ownership horizon’s differing impact on managers’ sustainable compensation structure.

Keywords: CEO inside debt; CEO pension plans; institutional ownership; institutional investor; managerial compensation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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