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The link between CEO compensation and CSR

A distinction needs to be made between normal and abnormal levels of investment in CSR, and this has to be viewed in the context of good corporate governance.

Some CEOs use CSR investment to build their reputations and enhance their personal status with stakeholders and leave personal legacies that destroy shareholders' wealth. In this scenario, a negative link between CSR and CEO compensation can be expected.

CONVENTIONAL wisdom suggests that companies should reward CEOs for undertaking corporate social responsibility (CSR) that improves the firms' performance.

Corporate governance and CSR advocates such as Global Reporting Initiatives and recommend that the compensation...

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