This study, which PwC conducted with Dr. Alexander Pepper at the London School of Economics and Political Science, looks at the views of over 1,100 senior executives in 43 countries, across varying senior organizational roles, companies and industries.
This study, which we conducted with Dr. Alexander Pepper at the London School of Economics and Political Science, looks at the views of over 1,100 senior executives in 43 countries, across varying senior organizational roles, companies and industries. We analyzed the responses of our participants by gender, by age and by country.
What we found is that there is an emerging consensus, at least in Western economies, that there is something askew with the current model of executive pay. Executive pay has risen dramatically over a period when, in hindsight, the Western economic model has not been at its most successful.
The debate about executive pay has focused on whether shareholders are getting what they want, whether current levels of executive pay are acceptable to society, whether remuneration committees are doing their job properly.
But surprisingly little attention has been paid to perhaps the most important constituency: executives themselves.
The study focuses on the attitudes of executives, who are one of several "stakeholders" in the executive pay arena.
The results reveal a number of common behavioral traits, which show clearly that executives don’t necessarily think in the way that many incentive methods assume.
Fewer than half of executives think that their long-term incentive plan is an effective incentive but two-thirds of participants value the opportunity to participate in their firm’s long-term incentive plan The research shows that while the tangible, economic value of long-term incentives to executives may be far lower than the cost companies bear to provide them, these plans nonetheless provide intangible value to participants. Among these intangible benefits are the feeling of being part of an "elite" group within the organization and the feeling of sharing in the company's success.