This dissertation presents the results of three experimental research studies investigating factors within the executive compensation process and the effects these factors have on the pay-for-performance paradigm. The first study examines the influence of individual anchoring and the effects of private versus public decisions upon compensation awards by subjects role-playing as either an outside CEO or a non-CEO director. Research results show that subjects anchor to personal pay levels, CEO subjects shield the focal CEO from declining compensation when performance is below average, and that this phenomenon is mitigated when the individual director-subject decision is deemed to be made public. The shielding of compensation is consistent with Social Comparison Theory in that the CEO-subjects identify to and protect the CEO by limiting negative compensation awards of the CEO, and thus, representing an agency cost. The second study examines affect as an influencing factor on individual decision makers in the compensation setting process. Results are consistent with Prospect Theory in that, in the absence of a tangible payoff, personal affect is the outcome monitored and used by individuals in the decision process in the determination of a gain or loss. Using personal pay and personal performance as anchors for subjects role-playing as directors on the compensation committee, results indicate that subjects make decisions to maximize (minimize) positive (negative) affect in compensation awards to the focal CEO. The findings suggest that although individual anchors may interact and add to the complexity of the decision process, the outcomes are consistent with Prospect Theory. The third study examines group decision making as compared to individual decisions when making compensation awards. Results show that in a committee of individuals where a majority of beliefs is present, group polarization occurs and the compensation results are exaggerated as compared to the individual beliefs. The findings also suggest, though, that the appointment of a leader as chair of the committee, either in the majority or minority view, has a moderating effect on the group outcome. These results highlight the potential for agency costs in the group decision process that may be found in the executive compensation-setting environment. Overall, these results add to the knowledge of factors affecting executive compensation. These studies provide evidence that individual anchors, individual performance, individual affect, and the group decision process may add to agency costs and be contributing factors in the imperfection of the pay-for-performance paradigm. / Ph. D.

In the past decade, public scrutiny surrounding rising levels of executive compensation has led to more stringent independence requirements for compensation committees. However, there is little research studying the effects of compensation committees on executive pay from the time these new requirements were implemented. My paper studies the effects of compensation committee chair personal ties to the CEO, economic interests, and group committee characteristics on both the level and structure of CEO compensation. My findings suggest that certain committee chair personal ties to the CEO are associated with both a higher level of CEO compensation and a higher percentage of CEO salary compensation. I also find that the more compensation committee chairs are paid, the less likely they are to create CEO pay plans with strong incentive provisions, but the more likely they are to increase the level of total CEO compensation. The higher the committee chair’s ownership percentage is in the company, the less likely they are to create low-risk CEO pay plans, and the more likely they are to increase the level of total CEO compensation.

Extant research finds inconclusive evidence about the CEO horizon problem. One possibility is that compensation committees design CEO compensation in a way that discourages retiring CEOs from opportunistic earnings management and R&D reduction. However, compensation committees dominated by co-opted directors may not be as effective as those with fewer co-opted directors in mitigating the CEO horizon problem, because directors co-opted by the CEO tend to bias their decisions in favor of the CEO. I find that compensation committees dominated by co-opted directors are associated with higher CEO compensation packages. I document R&D reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors, and find that R&D reduction and income-increasing accruals are less discouraged by compensation committees dominated by co-opted directors when deciding CEO compensation. I also examine the effect of boards of directors and compensation committee characteristics on CEO compensation and on mitigating the CEO horizon problem. I find that CEO compensation positively associates with CEO power, director independence, and the percentage of busy directors, and negatively associates with board of directors and committee size and director ownership. Moreover, I find that retiring CEOs are more likely to reduce R&D expenditures when CEOs have more power, and director tenure is longer; retiring CEOs in firms with large boards of directors and compensation committees are less likely to manage accruals.

功能性委員會－薪酬委員會之設置可被認為是強化公司治理的關鍵之一， 其主要功能是在於協助公司完成健全高階經理人之考核與薪酬管理制度，並讓 公司治理結構更加完善。薪酬委員會之設置已在歐美國家行之有年，而我國至 最近 2011 年才強制上市櫃及興櫃公司設置薪酬委員會，目的在於希望藉由薪 酬委員會之設置能有助於屏除公司經營團隊存有肥貓之疑慮。而距離實施已有 一年之時間，本研究主要在於探討現階段上市櫃公司薪酬委員會組成及品質與 代理問題之關聯性。實證結果發現：由公股主導之上市櫃公司，委員會委員擁 有學術背景之佔比愈高；專業經理人治理及盈餘分配比愈高之上市櫃公司，委 員會委員擁有企業界背景之佔比愈高；機構投資人持股比愈高之上市櫃公司， 委員會委員擁有學術及企業兩者經驗之佔比愈高；經理人持股愈高、機構投資 人持股比愈高之上市櫃公司，薪酬委員會品質愈佳；盈餘分配比愈高、有交叉 持股行為之上市櫃公司，其薪酬委員會品質愈差。 / The compensation committee plays an important role in enhancing cooperate governance. The purpose of the compensation committee is not only to administer and evaluate the company's compensation policies for the board of directors, but also to set appropriate and supportable pay programs for the CEO and other executive officers of the company. The existence of compensation committee is common in developed countries, but was just required in Taiwan since 2011. Therefore, this paper mainly focuses on the composition of compensation committee and its quality associated with agency problem. By using sample of 1,440 listed companies in Taiwan, the result shows that government-owned corporations tend to have a higher proportion of their compensation committee members from academic background; companies ruled by managers tend to have a higher proportion of their compensation committee members with business background; the higher the proportion of institutional investors in the company, the higher the proportion of the compensation committee members possess both academic and business experience. In addition, CEO’s shareholding and institutional investors’ shareholding are positively associated with the quality of the compensation committee. However, the cash flow right is negatively associated with the quality of the compensation committee; a company with cross-shareholding characteristic is also negatively associated with the quality of the compensation committee. Key

本文主要目的為探討經理人現金薪酬受到薪酬委員會品質影響時，是否會影響公司進行租稅規避行為。本文以當期有效稅率、現金有效稅率、總財稅差異以及永久性財稅差異衡量公司之租稅規避，而薪酬委員會品質衡量則依據Sun and Cahan (2009)所提出之方式衡量，並計算出各公司的薪酬委員會品質分數。研究期間為2012年至2014年之上市櫃公司，但不含產業性質特殊之金融業公司。其實證結果發現經理人現金薪酬與公司進行租稅規避行為呈顯著正相關，但加入薪酬委員會品質時，發現受到薪酬委員會品質影響之經理人現金薪酬與公司租稅規避行為呈顯著負相關，其結果顯示，當薪酬委員會品質越佳時，公司越不會進行租稅規避行為。

為強化公司治理，我國強制上市(櫃)公司須於2011年底前設置薪酬委員會，本研究首先探討公司自願在2011年底前設置薪酬委員會之因素。因為法令還未強制設置薪酬委員會前，我國已自願設置薪酬委員會之公司約2%，無法使用差異中之差異法(Difference-in-difference)，故本研究以我國家族企業為研究對象，探討相較於非家族企業，薪酬委員會設置對家族企業之公司價值的影響。 本研究結果顯示產業龍頭公司有設置薪酬委員會、公司規模、股東權益報酬率及董事會之獨立性與自願設置薪酬委員會呈現正相關。另外，家族企業相較於非家族企業而言公司價值較低，設置薪酬委員會後公司價值差距變小，但是未達統計上的顯著，亦即，設置薪酬委員會對家族企業的效益及非家族企業的效益沒有顯著差異。 / In order to enhance corporate governance, the R.O.C. Securities and Exchange Act was amended in 2010 to force listed companies to establish a Compensation Committee by the end of 2011. First, this study is to investigate which determinants may encourage companies to voluntarily establish the compensation committee. Then, we investigate whether setting compensation committee or not can increase firm value in family firms more than non-family firms. Because of few volunteers, we can’t use difference-in-difference. The results implicate that voluntary formation of compensation committee is associated with leading enterprise in industry which establishes compensation committee, greater size of the firms, higher return on equity and higher independence of the board of directors. In addition, on comparing Compensation Committees established or not, there appears to be no significant correlation with firm value between family firms and non-family firms.

Este trabalho examina a disciplina legal da remuneração dos administradores das sociedades anônimas. A análise é feita a partir de três perspectivas: (i) a dos incentivos que as estruturas de remuneração podem gerar ao desempenho dos administradores; (ii) a dos problemas e conflitos que a remuneração pode causar, notadamente entre os acionistas controladores e os não controladores, bem como entre os administradores e os acionistas; e (iii) a das soluções que a remuneração proporciona, sobretudo ao alinhar os interesses dos administradores com os da companhia e dos acionistas. Entre os objetivos esperados estão a contribuição para as discussões teóricas sobre a remuneração dos administradores e o aperfeiçoamento da aplicação da sua disciplina legal. Para tanto, serão de especial importância os comentários sobre a necessidade de aprimoramento das práticas de governança corporativa, em particular (i) a transparência, como mitigador de assimetria informacional e indutor de comportamentos adequados; e (ii) o comitê de remuneração, como elemento agregador de independência e redutor dos conflitos de interesse. Do ponto de vista estrutural, o trabalho divide-se em 6 capítulos. O primeiro contextualiza a importância da discussão teórica sobre o tema à luz de três recentes eventos: (i) a edição da Instrução CVM nº 480, de 2009; (ii) o crescimento do mercado de capitais brasileiro; e (iii) a dispersão da propriedade acionária observada em algumas companhias e a relação entre essa dispersão e a remuneração dos administradores. O segundo capítulo faz uma incursão na discussão sobre a remuneração dos administradores nos Estados Unidos, tratando dos problemas de agência e da remuneração como solução parcial para os referidos problemas ou parte integrante deles. O terceiro capítulo cuida da disciplina da remuneração dos administradores na Lei nº 6.404, de 1976. Os capítulos 4 e 5 tratam de modo específico de duas das modalidades de remuneração historicamente mais importantes nas companhias brasileiras: a participação nos lucros e a remuneração baseada em ações, particularmente as opções de compra de ações. Por fim, o sexto capítulo fecha o trabalho com considerações finais sobre a análise realizada e sobre as reflexões e estudos ainda a serem conduzidos. / The aim of this study is to examine the legal framework of executive compensation in Brazilian corporations. The analysis is conducted from three perspectives: (i) the incentives that compensation structures can create towards the enhancement of executives performance; (ii) the problems and conflicts arising from compensation schemes, particularly between controlling and non-controlling shareholders, as well as between managers and shareholders in general; and (iii) the solutions provided by compensation schemes, especially by aligning the interests of managers with those of the company and its shareholders. Some of its intended objectives are contributing to theoretical discussions about executive compensation and improving the application of its legal framework. For these purposes, comments on the need for improvement of corporate governance practices are noteworthy, particularly when it comes to: (i) disclosure, as a measure capable of mitigating information asymmetry and inducing appropriate behavior; and (ii) the compensation committee, as an element capable of promoting independence and reducing conflicts of interest. In terms of structure, this study is divided into six (6) chapters. The first chapter contextualizes the importance of theoretical discussion on the topic, taking into account three recent events: (i) the issue of CVM Instruction No. 480, of 2009, by the Brazilian Securities and Exchange Commission; (ii) the growth of the Brazilian capital market; and (iii) the ongoing shareholding dispersion noticed in some companies and the relationship between such dispersion and executive pay. The second chapter tours the discussion about executive compensation in the United States, dealing with agency problems and with compensation schemes as either part of such problems or a partial remedy to them. The third chapter addresses the legal framework of executive compensation as established by Law No. 6,404, of 1976. Chapters 4 and 5 encompass two specific compensation schemes among the most historically important ones for Brazilian companies: profit sharing and equity-based compensation, particularly stock options. At last, Chapter 6 concludes this study with final remarks on the analysis conducted herein and on the reflections and studies to be yet carried out.

L’objectif de ce travail a été de cerner les différents acteurs et mécanismes qui pourraient avoir la capacité de fixer la rémunération des dirigeants ainsi que la logique avec laquelle les décisions sont prises. Pour répondre à cette problématique, nous avons retenu une démarche en trois articles dans lesquels nous définissons une question de recherche pour chacun. Tout d’abord, nous nous intéressons au lien entre rémunération et performance dans le contexte français. Ensuite, nous mettons l’accent sur le rôle des mécanismes de gouvernance dans la détermination de la rémunération des dirigeants français. Enfin nous étudions les différents acteurs et mécanismes qui interviennent dans la fixation de la politique de rémunération des dirigeants. Pour chaque article, nous développons un cadre conceptuel sur la base de deux perspectives théoriques complémentaires. Les deux premiers articles se positionnent dans la perspective disciplinaire actionnariale, alors que le troisième article se place dans une perspective élargie de la gouvernance. Les cadres théoriques présentés ont été confrontés à l’épreuve de la réalité. Cette mise à l’épreuve a été réalisée par l’intermédiaire de méthodes quantitatives pour les articles 1 et 2 (méthodes statistiques de régression linéaire), et qualitatives pour l’article 3 (étude du cas Vinci). Nos résultats montrent tout d’abord, que la rémunération des dirigeants des sociétés cotées françaises est positivement liée à la richesse des actionnaires. En outre, et contrairement à l’hypothèse politique de Roe (2001), la rémunération globale des dirigeants français a un effet incitatif plus important que dans les entreprises américaines. Ensuite, aucun des mécanismes étudiés (conseil d’administration, comité des rémunérations et structure de propriété) n’a un impact significatif sur la sensibilité de la rémunération à la performance. Enfin, le processus décisionnel concernant la rémunération du dirigeant peut être fortement influencée par le dirigeant lui-même (en raison des réseaux relationnels ou bien des biais comportementaux) ainsi que d’autres mécanismes de gouvernance partenariale (médias et recours judiciaire). / The objective of this research was to identify the different processes and key actors involved in defining executive's income but also the logic with which decisions are made. To address this issue, a three-step approach was used in which a research question was raised in each one. First of all, the link between performance and income in the French context will be assessed. Then, the role of governance mechanisms on executives ‘salary will be established. Finally, the different actors and mechanisms in determining salary’s policy will be analyzed. For each article, a conceptual framework was developed based on two complementary theoretical perspectives. The first two items are positioned in the disciplinary perspective shareholder, while the third item is placed in wider governance. Theoretical frameworks presented were faced with the test of reality. This Analysis was conducted through quantitative method for items 1 and 2 (linear regression) and qualitative method in the third article (Vinci case study). The first results show that CEO’s incomes from listed French companies are positively related to shareholder wealth. In addition, and contrary to Roe’s hypothesis (2001), the total compensation of French leaders have an incentive base greater than in U.S. companies. Secondly, none of the mechanisms studied (board of directors, compensation committee and ownership structure) has a significant impact on the sensitivity of Salary - performance. Finally, the decision-making process concerning executive’s compensation may be strongly influenced by the leader himself (due to relational networks or behavioral biases) and other stakeholder governance mechanisms (media and judicial remedy).