We strongly believe in the potential of our new remuneration model, but there are also several remaining open questions. As a next step, we will continue to contribute to the efforts to improve executive remuneration and will address these open questions in future research in partnership with universities and business schools and the business and investment community at large. We highlight some of the key research areas:
- Standardisation in non-financial measurement, accounting and reporting
- Effective implementation of a mechanism for rewarding executives based on stakeholder long-term value
- How to best deal with ‘societal red lines’
- Internal governance at firms
- Optimal interplay between internal governance and external governance
- Optimal interplay between private action and public action
Current research initiatives
A laboratory experiment will be conducted to analyze how the remuneration model, that is proposed in the Green Paper, shapes executive behavior.
The treatment-by-treatment comparison of firm outcomes aims to show that different reward systems evoke different executive behaviors. Moreover, it is hypothesized that the reward system that is presented in the Green Paper steers towards both more environmental-friendly and long-term oriented decision-making.
This study is called the Norges Research because it seeks to answer the important question following the desire of some major institutional investors (initiated by Norges Bank Investment Management (NBIM)) to stop the use of performance conditions and align the interests of executives with the shareholders by means of restricted stock grants with long holding periods. The study aims to analyse whether the application of performance conditions in long-term incentive plans have a more positive impact on the long-term value creation of firms compared to restricted stock