Effects of corporate social responsibility performance on CEO compensation and turnover

The effect of corporate social responsibility (CSR) performance on CEO compensation has been of interest to researchers in management, finance, and accounting for at least three decades ( Velte, 2020 ). We extend the literature by examining how the inclusion of CSR measures in CEO incentive contracts (CSR contracting) affects the CSR performance–compensation relationship. We also assess the impact of CSR performance on the likelihood of CEO turnover, considering firm stock performance. Our findings reveal a positive relationship between CSR performance and CEO pay, but the relationship is only significant in firms without explicit CSR contracting. Furthermore, while CSR performance is associated with CEO turnover, the association strengthens when a firm's stock return lags the industry average. Our study provides insights into how CSR contracting impacts the CSR-compensation link and the conditions under which CSR performance influences CEO turnover, offering important implications for boards of directors.