Directors’ Compensation and Insurance Firms’ Performance in Nigeria

Compensation is a complex and controversial subject. Researchers, academicians and consultants have devoted much time and efforts to understand the innumerable factors that underlie top management compensation. Of more importance to this study is how compensation imparts on firms’ performance. For some time now, executive compensation has been a matter of concern to corporate policy makers. Studies have shown that compensation is one of the most important strategies in human resource management; as it influences the productivity and growth of organizations. There is also a public outcry that insurance companies in Nigeria do not settle claims promptly; and in most cases only with the intervention of the regulatory bodies. There are many published issues on compensation that focus on organizational differences; there is little on whether compensation has any significant linkage with performance. Besides, improvement of corporate governance standards has been at the forefront of international debate in recent times. Compensation of directors and executives is one of the key issues in this debate. This study aimed at finding out if there is any relationship between remuneration and incentive systems on Nigerian insurance firms’ productivity. The net claims paid to contributors depict a measure of productivity as perceived by the insured, while the returns on assets depict productivity from the shareholders perspective. The two represent the dependent variable for study.