CSR and CEO pay: Does CEO reputation matter?

The stakeholder perspective in the corporate social responsibility (CSR) literature emphasizes the role of CSR in firm value creation and suggests that chief executive officers (CEOs) would be rewarded for higher levels of CSR engagement. In contrast, the agency theory perspective from financial economics considers CSR as a potential executive agency problem for shareholders, suggesting that CEOs would not be incentivized for CSR engagement. The present study addresses this contentious issue by theorizing and examining CEO reputation—based on employee recognition and competence respectively—as important moderators of the CSR–CEO pay relationship, using data on a sample of public companies from 2010 to 2015. Findings show that the nature of the relationship between a firm's CSR engagement and CEO pay is conditional on the level of the CEO's reputation based on employee recognition but not when based on competence. Implications for the literature and for managerial practices are also discussed.