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Journal cover: Corporate Governance

Corporate Governance

ISSN: 1472-0701

Online from: 2001

Subject Area: Business Ethics and Law

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Income differentials and corporate performance


Document Information:
Title:Income differentials and corporate performance
Author(s):Adrian Pryce, (Based at Northampton Business School, The University of Northampton, Northampton, UK), Nada K. Kakabadse, (Based at Northampton Business School, The University of Northampton, Northampton, UK), Tom Lloyd, (Based in Northampton, UK)
Citation:Adrian Pryce, Nada K. Kakabadse, Tom Lloyd, (2011) "Income differentials and corporate performance", Corporate Governance, Vol. 11 Iss: 5, pp.587 - 600
Keywords:Company performance, Executive pay, Executive remuneration, Gini coefficient, Income inequality, Pay structures
Article type:Conceptual paper
DOI:10.1108/14720701111176993 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Abstract:

PurposeThis paper seeks to make the case for new research into the perceived fairness and impact of executive pay.

Design/methodology/approachThe paper reviews the literature regarding executive compensation and corporate performance and examines the evidence that a more egalitarian approach to pay could be justified in terms of long-term shareholder value.

FindingsThere would appear to be no evidence to suggest that the growing gap between the pay of executives and that of the average employee generates long-term enterprise value, and it may even be detrimental to firms, if not the liberal capitalist consensus on which the corporate licence to operate is based.

Research limitations/implicationsThe paper outlines a new approach to tracking income differentials with corporate performance through the development of a corporate Gini coefficient “league table”.

Social implicationsThe proposed research is expected to point towards better practice in executive remuneration, and support the growing momentum for a sustainable and enlightened approach to business, in which the key goal is long-term enterprise value based on a fair distribution of the rewards of business.

Originality/valueIn producing a deeper understanding of the impact of widening income differentials, the paper should be of interest to senior executives in publicly quoted companies as well as press commentators, government officials and academics.



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