Compensation committee characteristics and director compensation design: a systematic literature review (SLR) and further research
摘要
Concerns over director compensation have raised questions about the competencies of compensation committees (CCs) in many regions. The effort to understand how CC competencies influence director pay has spurred increased research into compensation committee characteristics (CCCs) and the design of director compensation (DCD) across various economies. However, we observe that the current spread of empirical findings across economies limits our grasp of how well CC composition addresses compensation controversies. This paper aims to systematically identify, review, and synthesize existing empirical evidence to provide valuable insights into how CCCs influence director pay. We examined 76 studies, which yielded 245 findings over the past 35 years (1989–2024). Although context-specific, the synthesis shows that CCCs generally affect DCD. We also observed that, despite concerns about endogeneity in corporate governance research, most empirical findings related to CCCs and DCD are based on static economic models rather than dynamic econometric models. Additionally, many researchers tend to overlook the role of psychological influences in shaping director compensation and therefore often rely on single theories rather than multiple theories to explain the empirical relationship between CCCs and DCD. Lastly, most empirical evidence originates from developed economies, with limited attention given to developing economies, especially in Africa.