The Governance of CEO Incentives in English NHS Hospital Trusts

This study uses a sample of IPO firms to investigate the relation between the compensation committee, CEO compensation, and CEO incentives. We investigate two theoretical models: the three-tier optimal contracting model and the managerial power model. We find support for the three-tier agency model. The presence of significant shareholders on the compensation committee (i.e., those with share stakes in excess of 5 percent) is associated with lower CEO pay and higher CEO equity incentives. Firms with higher paid compensation committee members are associated with greater CEO compensation and lower incentives. The managerial power model receives little support. We find no evidence that insiders or CEOs of other firms serving on the compensation committee raise the level of CEO pay or lower CEO incentives.

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CEO Incentives in Chinese State-Controlled Firms

Economic Development and Cultural Change ◽

10.1086/688905 ◽

2017 ◽

Vol 65 (2) ◽

pp. 223-264 ◽

Cited By ~ 3

Author(s):

Xunan Feng ◽

Anders C. Johansson

Keyword(s):

Ceo Incentives ◽

Chinese State

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Board Committees, CEO Compensation, and Earnings Management

The Accounting Review ◽

10.2308/accr.2009.84.3.869 ◽

2009 ◽

Vol 84 (3) ◽

pp. 869-891 ◽

Cited By ~ 141

Author(s):

Christian Laux ◽

Volker Laux

Keyword(s):

Earnings Management ◽

Financial Reporting ◽

Audit Committee ◽

Ceo Compensation ◽

Incentive Pay ◽

Compensation Committee ◽

Board Committees ◽

Ceo Incentives ◽

Ceo Pay ◽

The Board Of Directors

ABSTRACT:We analyze the board of directors' equilibrium strategies for setting CEO incentive pay and overseeing financial reporting and their effects on the level of earnings management. We show that an increase in CEO equity incentives does not necessarily increase earnings management because directors adjust their oversight effort in response to a change in CEO incentives. If the board's responsibilities for setting CEO pay and monitoring are separated through the formation of committees, then the compensation committee will increase the use of stock-based CEO pay, as the increased cost of oversight is borne by the audit committee. Our model generates predictions relating the board committee structure to the pay-performance sensitivity of CEO compensation, the quality of board oversight, and the level of earnings management.

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