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Executive Pay and Legitimacy: Changing Discursive Battles Over the Morality of Excessive Manager Compensation

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  • Maria Joutsenvirta

Abstract

How is the (il)legitimacy of manager compensation constructed in social interaction? This study investigated discursive processes through which heavily contested executive pay schemes of the Finnish energy giant Fortum were constructed as (il)legitimate in public during 2005–2009. The critical discursive analysis of media texts identified five legitimation strategies through which politicians, journalists, and other social actors contested these schemes and, at the same time, constructed subject positions for managers, politicians, and citizens. The comparison of two debate periods surrounding the 2007–2008 financial crisis revealed significant differences in the discursive strategies and the corresponding moral struggles linked to legitimation of executive compensation. The analysis highlights a change in moral reasoning by social actors as they adapt their justifications to a changing social context. This study has important implications for our understanding of the ethical aspects and socio-political embeddedness of manager compensation. In particular, it adds to our knowledge of organizational legitimacy by showing how discursive strategies and the corresponding morality constructions used to (de)legitimate business activities can shift quickly as a result of a change in the social and political climate surrounding the legitimation struggle. Copyright Springer Science+Business Media B.V. 2013

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  • Maria Joutsenvirta, 2013. "Executive Pay and Legitimacy: Changing Discursive Battles Over the Morality of Excessive Manager Compensation," Journal of Business Ethics, Springer, vol. 116(3), pages 459-477, September.
    • Handle: RePEc:kap:jbuset:v:116:y:2013:i:3:p:459-477
    DOI: 10.1007/s10551-012-1485-1
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    2. Sonia Yasin & Muhammad Irfan & Muhammad Shaukat Malik & Fasiha Nargis, 2022. "The Relationship between Executive Remuneration and Organizations Efficiency," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(3), pages 59-70, December.
    3. Steven E. Kaplan & Valentina L. Zamora, 2018. "The Effects of Current Income Attributes on Nonprofessional Investors’ Say-on-Pay Judgments: Does Fairness Still Matter?," Journal of Business Ethics, Springer, vol. 153(2), pages 407-425, December.
    4. Krista B. Lewellyn & Maureen I. Muller-Kahle, 2016. "The configurational effects of board monitoring and the institutional environment on CEO compensation: a country-level fuzzy-set analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(4), pages 729-757, December.
    5. Walid Cheffi & Sonia Abdennadher, 2019. "Executives’ Behaviour and Innovation in Corporate Governance: The Case of Internet Voting at Shareholders’ General Meetings in French Listed Companies," Journal of Business Ethics, Springer, vol. 156(3), pages 775-798, May.
    6. Ann-Christine Schulz & Miriam Flickinger, 2020. "Does CEO (over)compensation influence corporate reputation?," Review of Managerial Science, Springer, vol. 14(4), pages 903-927, August.
    7. Matthew Caulfield, 2021. "Pay Secrecy, Discrimination, and Autonomy," Journal of Business Ethics, Springer, vol. 171(2), pages 399-420, June.
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    9. Ali Besharat & Kimberly A. Whitler & Saim Kashmiri, 2024. "When CEO Pay Becomes a Brand Problem," Journal of Business Ethics, Springer, vol. 190(4), pages 941-973, April.

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