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審計委員會權益薪酬之決定因素
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1. Introduction
Following the rise in granting stocks and stock options to top executives, such
compensation for nonemployee corporate directors has grown tremendously during the past
decades (Fich and Shivdasani, 2005; Gong and Li, 2007). According to Executive
Compensation Reports, only 1.6% of the 1,000 largest companies in the U.S. offered stocks
for directors in 1983, but by 1994, the number has increased to approximately 20% (Lublin
and Bulkeley, 2006). Another survey conducted by
Directorship. Inc
. reports that in 1992,
just over 200 corporations in the
Fortune 1000
list offered stock option compensation, but by
1997, almost 500 firms in the same list had a stock option remuneration system in place for
outside directors (Fich and Shivdasani, 2005).
1
The 2011 U.S. Director Compensation and
Board Practices Report also shows that on average, half of the total compensation for board
members consists of stock and option awards (Tonello, 2011). The proportion of equity-
based compensation to total compensation in the computer services industry reaches as high
as 71.1%.
2
Such equity-based compensation schemes have become so popular that some
firms choose to fully adopt them. For example, Coca-Cola implemented a new incentive plan
in 2006 that compensates its directors only with performance-based equity share units
(Myerson, 2006). Given their extensive use by firms, the mechanism of equity-based
compensation for directors is particularly worth further investigation.
However, stocks and options as awards for directors bear some potential risks,
especially for audit committee members. Since the implementation of the Sarbanes-Oxley
Act (SOX), audit committee members have more responsibilities in hiring, compensating,
evaluating, and overseeing external auditors. They are also responsible for reviewing the
firm’s audit process, internal controls, financial statements, supervision of the internal audit
function, and resolving differences of opinion between firms and external auditors
(Securities Exchange Act of 1934). A higher degree of audit committee independence from a
firm’s management is thought to be important so that the committee can carry out its
responsibilities objectively (Lynch and Williams, 2012).
However, a number of studies argue that the independence of the committee may be
1 In addition to stock options, some firms also award restricted stocks and phantom stocks to outside
directors.
2 The proportion of equity-based to total compensation ranges from 22.2% to 71.1% when firms are
categorized by industry; 44.9% to 56.2% when categorized by annual revenue, and 35.6 % to 59.4% when
categorized by asset value.