ACCOUNTING FOR THE EXPLANATIONS OF CEO COMPENSATION - SUBSTANCE AND SYMBOLISM

While current debates about CEO compensation have generally been domin ated by economic and political perspectives on CEO/board relations, we argue in this paper that CEO compensation may be driven by symbolic a s well as substantive considerations. We develop an interdisciplinary theoretical framework to (1) explain why alternative explanations root ed in agency and human resource logics may be used to reduce ambiguity surrounding the adoption of new incentive plans for CEOs and (2) iden tify the possible structural (e.g., institutional, demographic, and ec onomic), and interest-based (e.g., political) factors influencing the use of such explanations. We generate and test hypotheses predicting t he alternative explanations for new long-term incentive plans using da ta taken from proxy statements over a 15-year period. The findings sup port the notion that explanations for CEO compensation reflect both su bstance and symbolism.