TY - BOOK

T1 - An Examination of the Effectiveness of Executive Compensation and Management Activities on the Performance of selected Oil and Gas Exploration and Production Companies listed on New York and Toronto Stock Exchanges

AU - Langanger, Helmut

N1 - no embargo

PY - 2022

Y1 - 2022

N2 - Abstract In the wake of frequently excessive pay packages that are rewarded to executives despite a weak company performance, the pay-for-performance issue has received widespread attention during the last 30 years. The boards of listed companies and their compensation committees are under increasing scrutiny by shareholders, stakeholders, proxy firms, the media, and the public regarding compensation contracts for their executives. This thesis examined whether there is a link between the effectiveness of executive compensation and management activities on the performance of oil and gas exploration and production companies. For this purpose, a sample of 85 such companies listed on the New York and Toronto stock exchanges was analyzed as the executive compensation disclosure regulations on these ex-changes are the same. The statistical analyses showed that short-term and long-term components in compensation contracts—as agreed upon between boards and executives—and management activities only have a small effect on the absolute 3-years total shareholder return as a market-based indicator. As to accounting-based indicators, there is a weak association between compensation components and revenue growth but a strong link between management activities and revenue growth. In terms of management activities, the greatest impact on revenue growth comes from the oil and gas output growth, which in turn is influenced mainly by heavy capital expenditures. There is no link between compensation components, management activities, and net income growth as another accounting-based indicator. Based on these findings recommendations were made for boards and compensation committees concerning the design of targets in compensation agreements for companies in the investigated industry sector.

AB - Abstract In the wake of frequently excessive pay packages that are rewarded to executives despite a weak company performance, the pay-for-performance issue has received widespread attention during the last 30 years. The boards of listed companies and their compensation committees are under increasing scrutiny by shareholders, stakeholders, proxy firms, the media, and the public regarding compensation contracts for their executives. This thesis examined whether there is a link between the effectiveness of executive compensation and management activities on the performance of oil and gas exploration and production companies. For this purpose, a sample of 85 such companies listed on the New York and Toronto stock exchanges was analyzed as the executive compensation disclosure regulations on these ex-changes are the same. The statistical analyses showed that short-term and long-term components in compensation contracts—as agreed upon between boards and executives—and management activities only have a small effect on the absolute 3-years total shareholder return as a market-based indicator. As to accounting-based indicators, there is a weak association between compensation components and revenue growth but a strong link between management activities and revenue growth. In terms of management activities, the greatest impact on revenue growth comes from the oil and gas output growth, which in turn is influenced mainly by heavy capital expenditures. There is no link between compensation components, management activities, and net income growth as another accounting-based indicator. Based on these findings recommendations were made for boards and compensation committees concerning the design of targets in compensation agreements for companies in the investigated industry sector.

KW - Vorstandsvergütung

KW - Bezahlung für Leistung

KW - Öl und Gas Explorations- und Produktionsgesellschaften

KW - Corporate Governance

KW - Anreizsysteme

KW - Executive Compensation

KW - Pay-for-Performance

KW - Oil and Gas Exploration and Production Companies

KW - Corporate Governance

KW - Incentive Schemes

M3 - Doctoral Thesis

ER -