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Peoples’ Views About the Acceptability of Executive Bonuses and Compensation Policies

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  • Marco Heimann
  • Étienne Mullet
  • Jean-François Bonnefon

Abstract

We applied a technique borrowed from the field of bioethics to test whether justice-related factors influence laypersons’ decisions concerning business ethics. In the first experiment, participants judged the acceptability of remuneration policies and in the second that of executive bonuses. In each study, participants judged a set of 36 situations. To create the scenarios, we varied (a) retributive justice—the amount of remuneration; (b) procedural justice—the clarity of the procedure that determined the remuneration; (c) distributive justice—the extent of the distribution of bonus payments amongst employees; and (d) restorative justice—a special compensation for hazardous working conditions or accidents at work. K-means clustering of all 36 judgments revealed four different personal positions in both experiments. One group of people readily accepted all situations. The other three groups’ judgments were mainly a function of distributive justice modulated in different ways by the context determined by the other variables. Furthermore, people conceive of distributive justice as categorical: Acceptability judgments only increase if companies give bonuses to all employees. Granting bonuses to a subset (i.e. mangers or executives) does not increase acceptability. Our results are useful for policy makers and provide business ethics researchers with a novel technique. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Marco Heimann & Étienne Mullet & Jean-François Bonnefon, 2015. "Peoples’ Views About the Acceptability of Executive Bonuses and Compensation Policies," Journal of Business Ethics, Springer, vol. 127(3), pages 661-671, March.
  • Handle: RePEc:kap:jbuset:v:127:y:2015:i:3:p:661-671
    DOI: 10.1007/s10551-014-2062-6
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    References listed on IDEAS

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    1. Lee Dunham & Ken Washer, 2012. "The Ethics of Hedging by Executives," Journal of Business Ethics, Springer, vol. 111(2), pages 157-164, December.
    2. Teisseyre, Nathalie & Mullet, Etienne & Sorum, Paul Clay, 2005. "Under what conditions is euthanasia acceptable to lay people and health professionals?," Social Science & Medicine, Elsevier, vol. 60(2), pages 357-368, January.
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    5. Lucian Arye Bebchuk & Jesse M. Fried, 2003. "Executive Compensation as an Agency Problem," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 71-92, Summer.
    6. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
    7. Phillips, Robert & Freeman, R. Edward & Wicks, Andrew C., 2003. "What Stakeholder Theory is Not," Business Ethics Quarterly, Cambridge University Press, vol. 13(4), pages 479-502, October.
    8. Bebchuk, Lucian A. & Fried, Jesse M., 2003. "Executive Compensation as an Agency Problem," Berkeley Olin Program in Law & Economics, Working Paper Series qt81q3136r, Berkeley Olin Program in Law & Economics.
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    Cited by:

    1. Joana Margarida Sequeira Neto & Etienne Mullet, 2018. "Perceived Acceptability of Organizational Layoffs and Job Alliances During a Recession: A Mapping of Portuguese People’s Views," Journal of Business Ethics, Springer, vol. 152(4), pages 1149-1157, November.
    2. Jen-Shou Yang & Li-Ching Tsai, 2023. "The moderating effects of trustor characteristics and the cost of being trusted on the relationship between felt trust and OCB intention," Review of Managerial Science, Springer, vol. 17(7), pages 2417-2441, October.
    3. Egor Evdokimov & Dean Hanlon & Edwin KiaYang Lim, 2022. "Do Generalist CEOs Magnify Boardroom Backscratching?," Journal of Business Ethics, Springer, vol. 181(1), pages 221-247, November.

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