The impact of Corporate Social Responsibility on CEO Compensation: The Moderating Role of Family Status

This study examines the impact of CSR performance on CEO compensation. Using a sample of 107 German non-financial companies listed on the Frankfurt Stock Exchange, over the period 2008-2019, we found that ESG performance, proxied by ESG scores, has a positive and significant relationship on all components of CEO compensation. It seems, according to the Agency theory, that managers over-invest in CSR activities with the aim to improve their power and reputation. In addition, we investigate the moderating role that family status (family CEO versus professional CEO) has on CEO compensation. Our results show that when the CEO is member of a family the relationship between ESG and CEO compensation is negatively moderated. This suggests that when ESG performance increase, a family firm can benefit of an increased image and reputation and of a better financial performance. In such a context, the family CEO could be willing to accept a lower level of compensation. Overall, the results of our study are robust even after controlling for endogeneity concerns