Is Limiting Executive Compensation a Solution?

Year 2012, Volume: 14 Issue: 3, 81 - 100, 01.09.2012

Yrd.Doç.Dr.Emre Ergin

Abstract

The debate on the level of executive compensation is once more on the agenda. Today, average firm CEO compensation reaches 400 times that of the average employee in the US. This ratio is 22 in Britain, 10 in Europe and 30 in Turkey. Many nations restrict executive pay. Measures to limit executive compensation and the disclosure of the salaries are planned to be effective as of 2012 in Turkey. This paper first discusses the rationals for limiting the executive compensation. Then, it explores the adverse influences of limiting executive compensation on shareholders. Banking and insurance sectors are at the center of this discussion in Turkey. Pay performance sensitivity is investigated for the firms of those industries which are traded in Istanbul Stock Exchange (ISE). The findings indicate that the average pay performance sensitivity is close to zero, and 65% of the firms analysed have negative sensitivity. It is concluded that limiting the executive compensation for Turkey is not a sufficient solution for the shareholders and some suggestions are offered.

Keywords

Executive compensation, agency theory, pay-performance sensitivity, ISE, Turkey.

Üst Düzey Yönetici Ücretlerini Sınırlandırmak Bir Çözüm müdür?

Abstract

Üst düzey yöneticilere yapılan ödemeler hakkındaki tartışmalar yeniden alevlenmiştir. Amerika’da CEO ücretleri, alt kademe çalışanlarının ortalama ücretlerinin 400 katına varmaktadır. Bu oran İngiltere’de 22, Avrupa’da 10, Türkiye’de ise 30 katı düzeyindedir. Birçok ülke, yöneticilere yapılan ödemelere sınırlama getirmektedir. Türkiye’de, üst düzey yönetici ücretlerinin sınırlandırılması ve kamuya açıklanması yolunda 2012 yılından itibaren adımlar atılması planlanmaktadır. Bu çalışmada, öncelikle üst düzey yönetici ücretlerinin sınırlandırılması yönündeki gerekçeler tartışılmaktadır. Daha sonra ise, üst düzey yönetici ücretlerinin sınırlandırılmasının hissedarlar açısından olumsuz yönleri vurgulanmaktadır. Türkiye’de bu konunun en çok tartışıldığı banka ve sigorta sektörlerinde üst düzey yöneticilere yapılan ödemelerin işletme performansına duyarlığı İMKB’de işlem gören söz konusu işletmeler için araştırılmıştır. Elde edilen bulgularda, ilgili sektörlerdeki üst düzey yöneticilere yapılan ödemeler ile işletmelerin performansı arasında ortalama duyarlık sıfıra yakın bulunmuş ve incelenen işletmelerin yüzde altmışbeşinde duyarlığın negatif olduğu saptanmıştır. Türkiye için, ücretlerin sınırlandırılmasının hissedarlar açısından yeterli bir çözüm olmayacağı düşünülmekte ve bu konuda çeşitli önerilerde bulunulmaktadır.

Keywords

Üst düzey yönetici ücretleri, temsil kuramı, ödeme performans duyarlığı, İMKB, Türkiye

References

• Adams, J. Stacy (1963), Towards an Unders- tanding of Inequity, Journal of Abnor- mal and Social Psychology, 67:5, s.422-436.
• Alayoğlu, Nihat (2008), Üst Düzey Yönetici- lerin Ücretlendirilmesi ve Türkiye’deki Uygulamaların Tespitine Yönelik Bir Araştırma, İstanbul Üniversitesi Sosyal Siyaset Konferansları Dergisi, 55, s.151- 174.
• Ambrose, Maureen (2002), Contemporary Justice Research: A New Look at Fami- liar Question, Organizational Behavior and Human Decision Processes, 89:1, s.803-812.
• Bebchuk, Lucian, Fried, Jesse M. ve Walker, David I. (2002), Managerial Power and Rent Extraction in the Design of Execu- tive Compensation, University of Chi- cago Law Review, 69:3, s.751-761.
• Bebchuk, Lucian ve Fried, Jesse M. (2004), Pay without Performance: Overview of the Issues, Journal of Applied Corpo- rate Finance, 17:4, s.8-23.
• Bebchuk, Lucian ve Fried, Jesse M. (2010), Paying for Long-Term Performance, University of Pennysilvania Law Re- view, 158, s.1915-1959.
• Berle, Adolf ve Means, Gardiner C. (1932), The Modern Corporation and Private Property, New Brunswick, N.J., USA: Transactions Publishers.
• Bloom, Matt ve Michel, John G. (2002), The Relationships Among Organizational Context, Pay Dispersion, and Manage- rial Turnover, Academy of Managerial Journal, 45, s.33-42.
• Brick, Ivan E., Palmon, Oded ve Wald, John K. (2006), CEO Compensation, Director Compensation, and Firm Performance: Evidence of Cronyism?, Journal of Cor- porate Finance, 12:3, s.403-423.
• Capital (2010), CEO’lar Farkı Açıyor, http://www.capital.com.tr/ceolar- farki-aciyor-haberler/7187.aspx?1.Page, (Erişim Tarihi: 18.04.2011).
• Capital (2011), Capital Dergisi Ücret Araş- tırması, http://kobidestek.org/ozel- sektor-maaslari/, 18.04.2011). (Erişim Tarihi:
• Chou, Shirley, Fonkoua, Jean E. ve Pollard, Dennis (2011), Determination of the Performance Measure of Executive Compensation, Journal of Business and Economics Research, 9:2, s.121-136.
• Conyon, Martin ve Sadler, Graham (2010), Shareholder Voting and Director’s Re- muneration Report Legislation: Say on Pay in the UK, Corporate Governance: An International Review, 18:4, s.296- 312.
• Conyon, Martin J. (2011), Compensation Committees and CEO Pay. Mallin, Christine A. (der.), Handbook on Inter- national Corporate Governance Co- untry Analyses, 2nd ed., UK:Edward Elgar Pub., s.274-316.
• Conyon, Martin J. ve He, Lerong (2011), Exe- cutive Compensation and Corporate Governance in China, Journal of Cor- porate Finance, 17:4, s.1158-1175.
• DeConinck, James B. ve Stilwell, C. Dean (2004), Incorporating Organizational Justice, Role States, Pay Satisfaction and Supervisor Satisfaction in a Model of Turnover Intentions, Journal of Busi- ness Research, 57:3, s.225-231.
• DeVaro, Jed (2006), Internal Promotion Competitions in Firms, The RAND Jo- urnal of Economics, 37:3, s.521-542.
• Dillon, Karen (2009), The Coming Battle over Executive Pay, Harward Business Re- view, September, s.96-103.
• Duffhues, Pieter ve Kabir, Rezaul (2008), Is the Pay-Performance Relationship Al- ways Positive? Evidence from the Net- herlands, Journal of Multinational Financial Management, 18:1, s.45-60.
• Eckles, David L. ve Halek, Martin (2010), In- surer Reserve Error and Executive Compensation, The Journal of Risk and Insurance, 77:2, s.329-346.
• Equilar Inc., http://www.equilar.com/ceo- compensation/2011/coca-cola_muh- tar_kent.php, 22.04.2011). Tarihi:
• Eskew, Don E. (1993), The Role of Organiza- tional Justice in Organizational Citi- zenship Responsibilities and Rights Journal, 6:3, s.185-194. Employee
• Fama, Eugene ve Jensen, Michael (1983), Se- paration of Ownership and Control, Jo- urnal of Law Economics, 26:2, s.301-325.
• Fernandes, Nuno (2008), EC: Board Com- pensation and Firm Performance: The Role of “Independent” Board Members, Journal of Multinational Financial Ma- nagement, 18:1, s.30-44.
• Fernandes, Nuno (2009), Preserves Bonuses - Let Shareholders Decide, http://www.imd.org/research/chal- lenges/TC077-09.cfm, (Erişim Tarihi: 28.04.2011). IMD,
• Gillis, William E., McEwan, Ellen, Crook, T. Russell ve Michael, Steven C. (2011), Using Tournaments to Reduce Agency Problems: The Case of Franchising, En- trepreneurship Theory and Practice, 35:3, s.427–447.
• Groysberg, Boris (2010), Chasing Stars: The Myth of Talent and the Portability of Performance, Princeton University Press.
• Harris, Jared D. ve Bromiley, Philip (2007), Incentives to Cheat: The Influence of Executives Compensation and Firm Performance on Financial Misrepresen- tation, Organization Science, 18:3, s.350- 367.
• Harris, Jared D. (2009), What’s Wrong with Executive Compensation?, Journal of Business Ethics, 85, s.147-156.
• Hartzell, Jay C. ve Starks, Laura T. (2003), Institutional Investors and Executive Compensation, Journal of Finance, 58, s.2351-2374.
• Hilger, Stefan, Richter, Ansgar ve Schaffer, Utz (2012), Should I Stay or Should I Go? Rank-Order Tournaments and Top Executives Voluntary Departures, Wor- king paper, http://www.ebs.edu/file- a d m i n / r e d a k t e u r / funkt.dept.economics/Colloquium/Pa- pers_ST2012/Should%20I%20Stay%20 o r % 2 0 S h o u l d % 2 0 I % 2 0 G o % 2 0 - % Order%20Tournaments%20and%20To p%20Executive%20Voluntary%20De- partures.pdf, (Erişim Tarihi: 14.03.2012).
• Hindery, Leo (2008), Why We Need to Limit Executive Compensation, Business- w http://www.businessweek.com/ma- n a g i n g / c o n t e n t / nov2008/ca2008114_493532.htm, (Eri- şim Tarihi: 24.02.2011). k ,
• Homans, George C. (1961), Social Behavior: Its Elementary Forms, New York: Har- cout, Brace, & World.
• Jensen, Michael C. ve Meckling, William H. (1976), Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, Journal of Financial Econo- mics, 3:4, s.305-360.
• Jones, Derek C., Kalmi, Panu ve Kauhanen, Antti (2010), Teams, Incentive Pay, and Productive Efficiency: Evidence from a Food-Processing Plant, Industrial and Labor Relations Review, 63:4, s.606-626.
• Kubo, Katsuyuki (2005), Executive Compen- sation Policy and Company Perfor- mance in Japan, Corporate Governance, 13:3, s.429-436.
• Lazear, Edward ve Rosen, Sherwin (1981), Rank-Order Tournaments as optimum labor contracts, Journal of Political Eco- nomy, 89:5, s.841-864.
• Lin, Ying-Fen, Liao, Yi-Chen ve Chang, Kai- Chuan (2011), Firm Performance, Cor- porate Governance and Executive Compesation in High-Tech Business, Total Quality Management and Busi- ness Excellence, 22:2, s.159-172.
• Mayers, David ve Smith, Clifford W. (2010), Compensation and Board Structure: Evidence from the Insurance Industry, The Journal of Risk and Insurance, 77:2, s.297-327.
• Meydan, C. Harun, Şeşen, Harun ve Basım, H. Nejat (2011), Adalet Algısı ve Tü- kenmişliğin Örgütsel Vatandaşlık Dav- ranışları Üzerindeki Öncüllük Rolü, İş Güç Endüstri İlişkileri ve İnsan Kay- nakları Dergisi, 13:2, s.41-62.
• Mishra, Chandra S., McConaughy, Daniel L. ve Gobeli, David H. (2000), Effective- ness of CEO Pay-for-Performace, Re- view of Financial Economics, 9:1, s.1-13.
• Murphy, Kevin J. (1999), Executive Com- pensation, Handbook of Labor Econo- mics, 3:B, s.2485-2563.
• Ross, Stephen A. (1973), The Economic The- ory of Agency: The Principal’s Problem, American Economic Association, 63:2, s.134-139.
• Sepe, Simone M. (2010), Making Sense of Executive Compensation, Arizona Legal Studies, Discussion Paper No.10- 42.
• Wade, James B., O’Reilly, Charles A. ve Pol- lock Timothy G. (2006), Overpaid CEOs and Underpaid Managers: Fairness and Executive Compensation, Organization Science, 17:5, s.527-544.
• Watson, Steve (2011), Performance Pay: Lea- dership Prescription or Class A Narco- tic?, The Ashridge Journal, Spring, www.asgridge.org.uk/360.
• Wells, Harwell (2010), “No Man Can Be Worth $1.000.000”: The Fight over Exe- cutive Compensation in 1930s America, University of Richmond Law Review, 44, s.689-769.
• Yermack, David (2006), Flights of Fancy: Corporate Jets, CEO Perquisites, and In- ferior Shareholder Returns, Journal of Financial Economics, 80:1, s.211-242.
• Özsemerci, Kemal, (2003) Türk Kamu Yöne- timinde Yolsuzluklar, Nedenleri, Za- rarları ve Çözüm Önerileri, Sayıştay Araştırma Sayıştay Araştırma Dizisi, http://www.sayistay.gov.tr/yayin/ya- yinicerik/ aras27TKYYolsuz.pdf.
• Shanker, Melissa C. ve Astrachan. Joseph H., (1996) Myths and Realities: Family Bu- sinesses Contribution to the US Eco- nomy -A Framework for Assessing Family Business Statistics, Family Busi- ness Review, 9 (2), ss. 107–123
• Tarı, Recep (2008). Ekonometri, Gözden Ge- çirilmiş 5. Baskı, İzmit: Kocaeli Üniver- sitesi Yayınları No: 172.
• Peelle, Henry E. (2007) Reciprocating Percei- ved Organizational Support through Citizenship Behaviors, Journal of Ma- nagerial Issues; Winter 19, 4, ss. 554– 575.
• Williams, Steve, Pitre Richard, Zainuba, Mo- hamed. (2002), Justice and Organizatio- nal Citizenship Behavior Intentions: Fair Rewards Versus Fair Treatment, Jo- urnal of Social Psychology, 142 (1), ss. 33–44.
• Wong, Linda C. ve Kleiner, Brian H. (1994), Nepotism, Work Study, Vol. 43 No. 5, ss. 10–12,