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What Questions Do Board Members in Public Service Organizations Ask about Executive Compensation?

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  • CHRIS BART
  • Y. LILIAN CHAN
  • KIRIDARAN KANAGARETNAM

Abstract

The purpose of this study is to investigate the governance questions that board members in public service organizations ask as they go about fulfilling their responsibilities for the oversight of executive compensation. We investigate the usage and perceived importance by board members of the 24 questions proposed by the Canadian Institute of Chartered Accountants that directors should ask about executive compensation. The study is based on a usable sample of 47 board members from public service organizations who attended a Canadian director training program. Our results suggest that the recommended executive compensation governance questions are not being asked with the same frequency or considered equally important by board members of public service organizations. Furthermore, the correlation between a question’s usage frequency and its perceived importance was not perfect. However, there appears to be a significantly positive relationship among the number of executive compensation governance questions asked and selected elements of a board’s governance structure. Quelles questions les administrateurs des organismes de service public posent‐ils au sujet de la rémunération des cadres supérieurs ? Résumé L’étude a pour but d’analyser les questions de gouvernance que posent les membres des conseils d’administration des organismes de service public dans l’exercice de leurs fonctions de surveillance de la rémunération des cadres supérieurs. Les auteurs étudient l’utilisation par les membres des conseils d’administration des 20 questions que devraient poser les administrateurs sur la rémunération des cadres, selon l’Institut Canadien des Comptables Agréés, et l’importance qu’ils accordent à ces questions. L’étude se fonde sur un échantillon utile de 47 administrateurs d’organismes de service public ayant participéà un programme canadien de formation des administrateurs. Les résultats semblent indiquer que les questions de gouvernance recommandées en ce qui a trait à la rémunération des cadres supérieurs ne sont pas posées à la même fréquence ou jugées d’égale importance par les administrateurs des organismes de service public. En outre, la corrélation entre la fréquence d’utilisation d’une question et son importance perçue n’est pas parfaite. Toutefois, il semble exister une relation positive significative entre le nombre de questions de gouvernance posées sur la rémunération des cadres et certains éléments sélectionnés de la structure de gouvernance d’un conseil d’administration.

Suggested Citation

  • Chris Bart & Y. Lilian Chan & Kiridaran Kanagaretnam, 2011. "What Questions Do Board Members in Public Service Organizations Ask about Executive Compensation?," Accounting Perspectives, John Wiley & Sons, vol. 10(2), pages 83-108, June.
    • Handle: RePEc:wly:accper:v:10:y:2011:i:2:p:83-108
    DOI: 10.1111/j.1911-3838.2011.00020.x
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