Executive Pay and Legitimacy: Changing Discursive Battles Over the Morality of Excessive Manager Compensation

• Published in: Journal of business ethics Vol. 116; no. 3; pp. 459 - 477
• Main Author: Joutsenvirta, Maria
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer 01.09.2013; Springer Netherlands; Springer Nature B.V
• Subjects: Business and Management; Business Ethics; Business management; Business structures; Chief executive officers; Discourse; Economic crises; Education; Employee compensation; Ethics; Ethics and moral life; Executive compensation; Financial crisis; Financial management; Legitimacy; Management; Managers; Media; Morality; Pay for performance; Petroleum industry; Philosophy; Politicians; Politics; Quality of Life Research; Social interaction; Sociology; Sociology of communication and mass media. Sociolinguistics; Sociology of knowledge and ethics; Sociology of knowledge and sociology of culture; Sociology of organizations and enterprises. Bureaucracy and administration; Sociology of work and sociology of organizations; Stockholders; Studies; Finland; Media; Discourse; Executive compensation; Legitimacy; Moral reasoning; Financial crisis; Discourse Analysis; Construction; Cadre; Reasoning; Compensation; Moral Argument
• ISSN: 0167-4544; 1573-0697
• DOI: 10.1007/s10551-012-1485-1

How is the (il)legitimacy of manager compensation constructed in social interaction? This study investigated discursive processes through which heavily contested executive pay schemes of the Finnish energy giant Fortum were constructed as (il)legitimate in public during 2005-2009. The critical discursive analysis of media texts identified five legitimation strategies through which politicians, journalists, and other social actors contested these schemes and, at the same time, constructed subject positions for managers, politicians, and citizens. The comparison of two debate periods surrounding the 2007-2008 financial crisis revealed significant differences in the discursive strategies and the corresponding moral struggles linked to legitimation of executive compensation. The analysis highlights a change in moral reasoning by social actors as they adapt their justifications to a changing social context. This study has important implications for our understanding of the ethical aspects and socio-political embeddedness of manager compensation. In particular, it adds to our knowledge of organizational legitimacy by showing how discursive strategies and the corresponding morality constructions used to (de)legitimate business activities can shift quickly as a result of a change in the social and political climate surrounding the legitimation struggle.