ABSTRACT
Financial incentives are mechanisms used to align the goals of the agent to the principal. This study aims to investigate the relationship of the determinants of executive compensation with the financial and market performance of Brazilian companies traded listed on BM & FBovespa. Data were obtained through analysis of the reference forms provided by the Brazilian Securities Commission (CVM). The study is classified as exploratory with a quantitative approach. 228 companies were found after surveying the companies that provide what this information, which is the sample composing the research. We used the multiple linear regression with panel data to test the relationship between remuneration and performance of companies between the years 2011 to 2013. We found financial factors and non-financial factors as determinants of pay in Brazilian companies traded. Regression testing identified that there is a positive and significant relationship of financial performance, with remuneration based on financial and non-financial indicators together and pay only based on non-financial indicators. The market performance did not reach statistical significance with executive compensation. These results show that incentive plans that are based on financial indicators do not align the interests of agents to the main. The absence of a result between market performance pay systems states that compensation plans do not align the interests of principal and agent.
Keywords:
Executive’s Compensation; Agency’s Problem; Incentive Policy; Financial and Non-Financial Indicators
Thumbnail
