Perceived Legitimacy of Executives Bonuses in Time of Global Crisis: A Mapping of Portuguese People’s Views

Journal of Business Ethics 133 (3):421-429 (2016)
Abstract
The present study aimed to explore and map the views of Portuguese laypersons regarding the legitimacy of bonuses for senior executives. Two hundred eight participants, with various levels of training in economics, were presented with a number of concrete scenarios depicting the circumstances in which senior executives have received bonuses of variable amounts, and they were asked to indicate the extent to which such bonuses may be considered as legitimate. The scenarios were created by varying four factors likely to have an impact on people’s views: the extent to which the objectives fixed by the company have been met or not, the global economic context in which the company has performed, the availability of experienced senior executives in the sector under consideration, and the amount of money that has been awarded, in terms of both the euros and multiples of the average worker’s pay. Five qualitatively different personal positions were found. The most common positions were that executive bonuses were either never legitimate or not very legitimate. People without any background in economics were more likely to hold these views than people with a background in economics. The remaining 45 % of the participants supported the awarding of bonus, but their support was conditional, and the main condition was the extent to which the company’s objectives were met. Thus for most participants, the practice of awarding extra pay to senior executives was either never legitimate, or legitimate only when the company’s objectives have been attained, or legitimate only when, even in a time of economic crisis, the company’s objectives have been surpassed.
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DOI 10.1007/s10551-014-2406-2
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