Appraising Executive Compensation ESG-Based Indicators Using Analytical Hierarchical Process and Delphi Techniques

Round 1

Reviewer 1 Report

 

The paper entitled “Appraising executive compensation ESG based indicators using analytical hierarchical process and Delphi techniques” aims to rank the importance of both the pillars within the ESG model and the 5 indicators beneath each pillar for the purposes of executive compensation plans using AHP analysis.

The following major amendments are required before the paper can be published.

 In the second paragraph of the Introduction section the authors refer: “According to Phung, Trinh, Nguyen and Trinh (2022), […] the fact that there are no incentives for the companies’ executives to really endeavor to make a positive impact on the society and the environment”. That is not exactly true. There are several works that have pointed out that environmental protection and innovation can offer several incentives to companies. Thus, the authors are strongly advised to add a relevant critical analysis using papers like the following ones:

1.       Skordoulis, M., Kyriakopoulos, G., Ntanos, S., Galatsidas, S., Arabatzis, G., Chalikias, M., & Kalantonis, P. (2022). The Mediating Role of Firm Strategy in the Relationship between Green Entrepreneurship, Green Innovation, and Competitive Advantage: The Case of Medium and Large-Sized Firms in Greece. Sustainability, 14(6), 3286.

2.       Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of business ethics, 67(4), 331-339.

3.       Chen, Y. S. (2008). The driver of green innovation and green image–green core competence. Journal of business ethics, 81(3), 531-543.

4.       Nanath, K., & Pillai, R. R. (2017). The influence of green is practices on competitive advantage: Mediation role of green innovation performance. Information Systems Management, 34(1), 3-19.

It is very important to add the above critical analysis so as to be able to provide all the different views on the examined issue.

The paper’s methodology lacks some significant information. More specifically the authors state that a panel of 113 experts took part in their survey while they provide some of their demographics. However, they do not provide information about when the study was carried out, how they collected the research data and how they do consider representative the sample of 113 experts. Moreover, they should provide a critique on the different fields of the experts used, since according to the existing literature (see the above mentioned number 4 proposed paper) executives employed in different kinds of firms may have different views on the environment. This this divergence of perceptions may be even stronger in this research since activists are included in the sample. Last, the place (as understood South Africa) and its possible specific characteristics must be analyzed and at the same time the reason why this place is a relevant case to be analyzed must be supported.

The process of AHP must be further explained and supported as well.

Last, the results seem to be of particular interest. However, it would further improve the paper’s quality if the authors would add a diagram based framework to point out the results and their most important aspects. Moreover, the authors must make clear the paper’s novelty and contribution. In this aspect some propositions are needed on how their results can be used (e.g. they point out “under the environmental pillar, indicators addressing waste and greenhouse gas emissions are the top two most important”; how this result can be used and which are the possible policy of managerial implications that can derive from this result?).

Provided that the above mentioned amendments are addressed the paper can offer some important information on the field it concerns.

 

Author Response

Please see the attached.

Author Response File: Author Response.pdf

Reviewer 2 Report

Interesting area of research, however there are some areas that need to improve:

1. Need to provide an overview of ESG (its pillars) and why it become a main concern for this study.

2. Lack of justification of why the management need to be evaluated based on ESG indicators. What are the problem with the current compensation system (especially in South Africa), and how by using the ESG based compensation scheme will resolve the issue (if any).

3. In methodology, need to clearly described:

- how the 5 indicators identified - what process involved?

- any sepecific criteria to choose your sample, i.e., panel expert?

- no clear procedure of how the panel expert choose the indicators (any specific criteria/ guidelines)

- How do you come out with the measurement for each scale (any references?)

- Need to provide the descriptive value for each indicators -  from there we can see how the important indicators are chosen.

3. Overall: No clear conclusion on how and why the rank of the ESG pillars are significant to executive compensation, and its contribution.

 

Author Response

Please see the attached.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

The authors have adequately addressed all the amendments required. Thus, the paper can be published in present form.