How (Not) to Pay Non-executive Directors
Discussion Paper of the Institute for Organisational Economics 9/2012
15 Pages Posted: 21 Dec 2014 Last revised: 22 Dec 2014
Date Written: September 2012
Performance pay, at least as usually understood, is no good idea for non-executive directors. They have to supervise and control or in some situations even to fire and replace the executive managers. This means that their performance as supervisors is totally different from the performance of the supervised executive managers and even the company at large. Moreover, they are mostly interested in other things than their pay. Thus, their pay should be fixed and not too high.
Keywords: Board, Director, Executive, Incentive, Information, Manager, Non-executive, Pay, Performance, Supervisor
JEL Classification: M12, M21, M52, G34, D23, D82, K22
Suggested Citation: Suggested Citation