LOBALISATION AND THE PROVISION OF INCENTIVES WITHIN THE COMPANY: THE EFFECT OF INTERNATIONAL COMPETITION
The winning project is an empirical study of how companies adjust their executive salary policies to match the competitive environment in which they operate. To carry out the study, the authors used detailed information on North American companies and executives covering a period of time when fluctuating exchange rates and business policy obliged many companies to adapt to a changing environment.
The results of the study show that companies facing an unexpected increase in levels of international competition make significant changes to the remuneration structure for their executives. The main changes observed are as follows: instead of earning a fixed salary, remuneration becomes more directly linked to company performance, so that a greater proportion of salary is linked to results; likewise, salary increases associated with promotion are larger and this leads to a greater disparity of salaries within the company; furthermore, companies give greater rewards to executive talent and have a more aggressive personnel policy. In general terms, the results show how more intense international competition makes company profits more sensitive to good or bad decisions made by employees, the reaction of companies to this phenomena being to demand greater effort and skills from their staff and to reward them accordingly.
The results indicate that internationalisation, deregulation and increased competition between modern economies are partly responsible for labour mobility, changes in salary structures and particularly the increase in the use of incentive packages such as productivity bonuses or “stock options”.
The work sits within the framework of a wider line of research developed by the authors studying the effect of competition on diverse areas of company organisation, which shows that these results can be extended to other countries, to competition between local companies and to the body of workers within the company. The project in relevant insofar as it sheds light on the mechanisms through which globalisation and competition affect company productivity and employee welfare.
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Members of the Jury of the 2007 Edition of the “Jaime Fernández de Araoz Corporate Finance” Award comprises the following individuals:
CHAIRMAN:
General Director of Grupo SANTANDER
VICE-CHAIRMAN:
Chairman of CITIGROUP España
SECRETARY:
HRH The Prince of Asturias at his arrival to the II Edition of the “Jaime Fernandez de Araoz Corporate Finance” Award Ceremony being received by the President of the Community of Madrid , HE Ms. Esperanza Aguirre. |
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HRH The Prince of Asturias at his arrival to the II Edition of the “Jaime Fernandez de Araoz Corporate Finance” Award Ceremony, being received by the President of the Jury, Mr. Juan Rodríguez Inciarte, General Director of Grupo SANTANDER and by the State Secretary for Economic Affaires and Finance HE Mr. David Vegara. |
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HRH The Prince of Asturias with the members of the Jury of the II Edition of the “Jaime Fernández de Araoz Corporate Finance” Award. |
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HRH The Prince of Asturias with Luisa Saénz Varona, Jaime Fernández de Araoz’s widow and her children. | |
HRH The Prince of Asturias during his speech delivered at the Award Ceremony of the II Edition of the “Jaime Fernandez de Araoz Corporate Finance” Award. (see speech transcription) |
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Speech delivered by Mr. Alejandro Fernández de Araoz Gómez-Acebo at the Award Ceremony of the II Edición of the “Jaime Fernández de Araoz Corporate Finance” Award. (see speech transcription) |
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Speech delivered by the President of the Madrid Community HE Ms. Esperanza Aguirre at the Award Ceremony of the II Edición of the “Jaime Fernández de Araoz Corporate Finance” Award. (see speech transcription) |
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Speech delivered by HE the Secretary of the State for the Economy Mr. David Vegara at the Award Ceremony of the II Edición of the “Jaime Fernández de Araoz Corporate Finance” Award. (see speech transcription) |
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Presidential table of the Award Ceremony of the II Edition of the “Jaime Fernández de Araoz Corporate Finance” Award. Left to wright: Chairman of the Jury, Mr. Juan Rodríguez Inciarte, General Director of Grupo SANTANDER, the President of the Madrid Community, HE Ms. Esperanza Aguirre, HRH the Prince of Asturias, the Secretary of the State for the Economy HE Mr. David Vergara, and the Vice-chairman of the Jury, Mr. Alberto Ibañez, Chairman of CITIGROUP España. |
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HRH The Prince of Asturias presenting the Award to the winners María Guadalupe and Vicente Cuñat. | |
The winners María Guadalupe and Vicente Cuñat during their acceptance speech. | |
HRH The Prince of Asturias with the award winners, María Guadalupe and Vicente Cuñat. | |
HRH the Prince of Asturias after the Award Ceremony with the President of the Madrid Community, HE Ms. Esperanza Aguirre, the Secretary of the State for the Economy, HE Mr. David Vergara, the Chairman of the Jury, Mr. Juan Rodríguez Inciarte, General Director of Grupo Santander, Luisa Saénz Varona, Jaime Fernández de Araoz’s widow, and the winners, María Guadalupe and Vicente Cuñat. |
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