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

Abstract

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

Dilger, Alexander, How (Not) to Pay Non-executive Directors (September 2012). Discussion Paper of the Institute for Organisational Economics 9/2012, Available at SSRN: https://ssrn.com/abstract=2541032 or http://dx.doi.org/10.2139/ssrn.2541032

Alexander Dilger (Contact Author)

University of Münster ( email )

Institute for Organisational Economics
Scharnhorststr. 100
Münster, D-48151
Germany
+49-251-83-25330 (Phone)
+49-251-83-28429 (Fax)

HOME PAGE: http://www.wiwi.uni-muenster.de/io/en/organisation/Dilger.html

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