Do compensation committees do what they say they do? Evidence from narrative disclosure in proxy statements

Natalie Kyung Won Kim, Sewon Kwon and Jae Yong Shin

Finance Research Letters, 2025, vol. 73, issue C

Abstract: The Compensation Discussion and Analysis section in proxy statements provides narrative data on how Compensation Committees define and apply their Compensation Philosophy. However, the extent to which these philosophies—pay-for-performance and the attraction and retention of talented executives—translate into executive compensation practices remains unclear. To address this, we conduct a textual analysis of proxy statements from 2007 to 2016 to examine whether Compensation Committees align executive compensation with their stated philosophies. The findings show a stronger focus on pay-for-performance is linked to higher excess compensation, especially in firms lacking a general counsel among top officers and not employing a compensation consultant.

Keywords: Compensation committee; Compensation philosophy; Executive compensation; Compensation disclosure; Narrative disclosure (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324016660
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324016660

DOI: 10.1016/j.frl.2024.106637

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().