Much Sweat, Much Pay - Less Sweat, Less Pay? Evidence of "Cronyism" in the Determination of the Remuneration of Brazilian Executives

Cleber Roberto de Sena Veloso, Thaisa Renata dos Santos, Daiana Paula Pimenta, Moisés Ferreira da Cunha, Aletheia Ferreira da Cruz


Objective: This study verifies the relationship between the remuneration of the board of directors and the remuneration of executives, as well as the relationship between these remunerations, and the economic and financial performance of Brazilian publicly-held companies.

Method: The work promotes the analysis by estimating two regression models with panel data, pooled independent cross-sections and fixed effects.

Originality/Relevance: Scientific studies on remuneration in Brazil have focused on the relationship of remuneration with the economic-financial performance of companies and/or with the characteristics of corporate governance. However, there is still room to investigate possible mechanisms of reciprocity between salary increase of statutory directors and the remuneration increase among members of the boards of directors.

Results: The results indicate that the remuneration of the board of directors is positively related to the remuneration of executives; that these remunerations do not present a significant relation with the economic-financial performance of the companies; and that cash flow risk is negatively related to executive compensation.

Theoretical/Methodological Contributions: The study provides evidence of a synchronism between remuneration of executives and  directors, a fact that may explain why the remuneration of these agents is not related to the economic-financial performance of the companies. Also, it shows that executive compensation packages contribute to reducing the risk of the cash flows to which companies are exposed.


Performance of the Company; Executive Compensation; Board of Directors.


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