Review article

Trends in Dutch executive compensation

Dirk Swagerman ; Faculty of Economics and Business, University of Groningen
Erik Terpstra ; Faculty of Economics and Business, University of Groningen

Abstract

This article describes the trends in Dutch executive pay contracts. To increase our insight into this subject area, we conducted an empirical study on the basis of remuneration data provided by the executive board members of 71 Dutch listed companies over the period 2002-2004. The study starts from the premise that the
characteristics of a unique corporate governance regime, together with the environmental context, shape compensation arrangements. Based on a theoretical research study, which combines our empirical research results with a literature overview, we argue that an optimal compensation arrangement is a trade-off among complying with corporate governance standards, optimizing potential
incentives, preventing perverse incentives and offering a competitive pay package. It appears that this trade-off differs with each company at any moment in time. The relevance of this study may be threefold. First, its results can help shape the public
debate about the pay of top executives in the Netherlands. Second, it could serve as a blueprint for future research on executive compensation in the specific context of the Dutch governance system. Furthermore, it could help remuneration
committees in designing optimal compensation packages.

Keywords

Managerial compensation; top management; corporate governance; Netherlands

Hrčak ID:

48134

URI

https://hrcak.srce.hr/48134

Publication date:

21.12.2009.

Article data in other languages: croatian

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