Pascual Berrone from the University Carlos III of Madrid presented the first chapter of his dissertation on the link between CEO pay and what Berrone calls environmental performance at a research session moderated by IESE Professor Bruno Cassiman.
Central to Berrone's study is the question of whether CEOs get compensated or penalized for their environmental performance, i.e. their decision to implement management policies that limit or reduce the emission of chemicals that are harmful for human beings and the ecosystem. While literature on financial performance as a determinant of CEO compensation is vast and extensive, few studies have tackled the impact of environmental performance on managerial salaries.
Traditionalists hold that there is an inevitable trade-off between environmental strategies and profitability. The so-called revisionist view, on the other hand, claims that sound environmental policy can and often does coexist with financial benefits. Berrone explained that these conflicting views mostly stem from differences in the research context. His paper, which is currently under review for publication, draws on institutional and agency theory to dig deeper into the issue.
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