When CEO Pay Becomes a Brand Problem

Ali Besharat (), Kimberly A. Whitler () and Saim Kashmiri ()
Additional contact information
Ali Besharat: University of Denver
Kimberly A. Whitler: University of Virginia
Saim Kashmiri: University of Mississippi

Journal of Business Ethics, 2024, vol. 190, issue 4, No 12, 973 pages

Abstract: Abstract For over four decades, the topic of Chief Executive Officer (CEO) compensation has attracted considerable attention from the fields of economics, finance, management, public policy, law, and business ethics. As scholarly interest in CEO pay has increased, so has public concern about the ethics of high CEO pay. Despite growing interest and pressure among the public and government to reduce CEO pay, it has continued to increase. Using a multi-method design incorporating a pilot study, two online experiments, and an event study, we investigate the impact of CEO pay on consumer purchase intent and find that this negative relationship is magnified under conditions of brand crisis. We also find that the negative interaction of high CEO pay and brand crisis on purchase intent is more negative when the brand has strong equity. Finally, when the CEO is awarded high pay while the firm they manage is undergoing a brand crisis, consumers lose trust in the firm’s brand which reduces consumer purchase intent. This research provides insight on how governance decisions can impact consumer perceptions of corporate brands and consumer behavior, with implications for public policy leaders, boards of directors, CEOs, and Chief Marketing Officers regarding how to manage and message CEO pay.

Keywords: CEO pay; CEO compensation; Executive compensation; Brand trust; Signaling theory; Top management team; Upper echelons; Board of directors; Brand crisis; Brand equity (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10551-023-05394-0

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