CSR-Contingent Executive Compensation Contracts

Posted: 21 Aug 2017

See all articles by Atif Ikram

Atif Ikram

Arizona State University (ASU) - W.P. Carey School of Business

Zhichuan Frank Li

University of Western Ontario - Ivey School of Business

Dylan Minor

Anderson School of Management (UCLA)

Date Written: July 20, 2017

Abstract

We investigate the determinants of ‘CSR contracts’, compensation contracts that tie a portion of executive pay to CSR engagements. We find that CSR contracts are primarily granted by large firms with a history of being socially responsible, particularly in industries where employee safety and environmental protection concerns are likely to be important. We also find some evidence that CSR contracts are offered by well-governed firms to align the interests of executives with those of shareholders. Interestingly we find that, compared to Transparent CSR contracts that clearly define the relationship between executive pay and CSR-related milestones, Opaque CSR contracts correlate more strongly with measures of good governance and firm value.

Keywords: corporate social responsibility, CSR-contingent compensation, executive compensation, corporate governance

Suggested Citation

Ikram, Atif and Li, Zhichuan Frank and Minor, Dylan, CSR-Contingent Executive Compensation Contracts (July 20, 2017). Journal of Banking and Finance, 2019 Forthcoming. Available at SSRN: https://ssrn.com/abstract=3019985 or http://dx.doi.org/10.2139/ssrn.3019985

Atif Ikram

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

Zhichuan Frank Li (Contact Author)

University of Western Ontario - Ivey School of Business ( email )

1151 Richmond Street North
London Ontario, Ontario N6A 3K7
Canada

Dylan Minor

Anderson School of Management (UCLA) ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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