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- Title
When CEO Pay Becomes a Brand Problem.
- Authors
Besharat, Ali; Whitler, Kimberly A.; Kashmiri, Saim
- Abstract
For over four decades, the topic of Chief Executive Officer (CEO) compensation has attracted considerable attention from the fields of economics, finance, management, public policy, law, and business ethics. As scholarly interest in CEO pay has increased, so has public concern about the ethics of high CEO pay. Despite growing interest and pressure among the public and government to reduce CEO pay, it has continued to increase. Using a multi-method design incorporating a pilot study, two online experiments, and an event study, we investigate the impact of CEO pay on consumer purchase intent and find that this negative relationship is magnified under conditions of brand crisis. We also find that the negative interaction of high CEO pay and brand crisis on purchase intent is more negative when the brand has strong equity. Finally, when the CEO is awarded high pay while the firm they manage is undergoing a brand crisis, consumers lose trust in the firm's brand which reduces consumer purchase intent. This research provides insight on how governance decisions can impact consumer perceptions of corporate brands and consumer behavior, with implications for public policy leaders, boards of directors, CEOs, and Chief Marketing Officers regarding how to manage and message CEO pay.
- Subjects
CHIEF executive officers; EXECUTIVE compensation; INFORMATION theory in economics; CONSUMER behavior; PRODUCT management; BRAND equity; BOARDS of directors
- Publication
Journal of Business Ethics, 2024, Vol 190, Issue 4, p941
- ISSN
0167-4544
- Publication type
Article
- DOI
10.1007/s10551-023-05394-0