Sustainable Bonuses: Sign of Corporate Responsibility or Window Dressing?

Journal of Business Ethics, doi: 10.1007/s10551-012-1614-x, Forthcoming

38 Pages Posted: 2 Jan 2013

See all articles by Ans Kolk

Ans Kolk

University of Amsterdam Business School

Paolo Perego

Free University of Bozen-Bolzano; RSM Erasmus University

Date Written: December 31, 2012

Abstract

Despite a strong plea for integrating sustainability goals into traditional corporate bonus schemes, a comprehensive implementation of these systems has been lacking until recently. This article explores four illustrative cases from the Netherlands, where several multinationals started to pioneer with sustainable bonuses in the past few years. The article examines the set-ups and the different elements of bonus programmes used, in terms of performance criteria (focusing in particular on external versus internal benchmarking), their link to specific stakeholders, type and size of bonuses, target levels, and transparency. While sustainable bonuses signal corporate awareness of responsibility vis-à-vis society and stakeholders, credibility varies considerably depending on these elements. Our case evidence sheds some light on the extent to which sustainable bonuses may be a credible sign of corporate responsibility or rather just another perverse mechanism meant to keep up bonus levels (window dressing). A definite assessment is hampered by the emergent state and lack of full transparency – while ‘justified’ by companies for competitive reasons, this raises questions. Insights are offered to appraise current and future systems, and provide directions for further research.

Keywords: corporate responsibility, stakeholders, sustainable bonuses, window dressing, shareholders, performance measurement

JEL Classification: D21, D23, F23, G34, G35, J33, L21, M14, M40, M52

Suggested Citation

Kolk, Ans and Perego, Paolo, Sustainable Bonuses: Sign of Corporate Responsibility or Window Dressing? (December 31, 2012). Journal of Business Ethics, doi: 10.1007/s10551-012-1614-x, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2195023

Ans Kolk (Contact Author)

University of Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4289 (Phone)
+31 20 525 5281 (Fax)

HOME PAGE: http://www.anskolk.eu

Paolo Perego

Free University of Bozen-Bolzano ( email )

Faculty of Economics & Management
Piazza dell'Universita' 1
Bozen-Bolzano, 39100
Italy

HOME PAGE: http://www.unibz.it/en/faculties/economics-management/academic-staff/person/38679-paolo-perego

RSM Erasmus University ( email )

Department of Accounting & Control
Burg. Oudlaan 50
Rotterdam, 3062PA
Netherlands

HOME PAGE: http://www.rsm.nl/pperego

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