Are international top executives paid more? Empirical evidence on fixed and variable compensation in management boards of German MNCs

摘要

This paper asks the question whether international executives receive higher pay than their non-international peers. Building upon human capital theory and agency theory, we assume that highly international executives achieve higher market value in terms of their level of compensation than less international executives. To investigate this relationship, we use a multidimensional construct of internationalisation and differentiate between fixed and variable pay components of top executives. Based on a comprehensive sample of top executives from Germany's DAX firms, we find empirical evidence that 'being international' pays off for the individual in terms of variable compensation but not in terms of fixed compensation. We also demonstrate that the structure of compensation is affected by the internationalisation level of the supervisory board members. Hence, we show that governance bodies who are deciding on management board members' compensation should not be neglected in top management research.