Base salaries, bonus payments, and work absence among managers in a German company

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This paper provides scarce insider econometric evidence on the structure of management compensation and on the incentive effects of fixed base salaries and bonus payments. Six years of personnel data of 177 managers in a German company are analyzed with special emphasis on the highest achievable bonuses under a Management‐by‐Objectives (MBO) incentive scheme. The main finding of panel negative binomial regressions is that higher achievable bonus payments are correlated with fewer absent working days, which supports the incentive effect of performance pay for managers. The fixed base salary component is, however, not significantly correlated with managers’ work absence.
Original languageEnglish
JournalScottish Journal of Political Economy
Issue number5
Pages (from-to)523-536
Number of pages14
Publication statusPublished - 01.11.2014