COMPENSATION COMMITTEE COMPOSITION AS A DETERMINANT OF CEO COMPENSATION.

1998 ◽  
Vol 41 (2) ◽  
pp. 209-220 ◽  
Author(s):  
C. M. Daily ◽  
J. L. Johnson ◽  
A. E. Ellstrand ◽  
D. R. Dalton
Keyword(s):  
Ceo Compensation ◽  
Compensation Committee

scholarly journals CEO Monitoring and Board Effectiveness: Resolving the CEO Compensation Issue

2018 ◽  
Vol 21 (2) ◽  
pp. 123-134
Author(s):  
Chiraz Ben Ali ◽  
Frédéric Teulon
Keyword(s):  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Board Governance ◽  
Board Effectiveness ◽  
Past Performance ◽  
Compensation Committee ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

This study examines the impact of board governance mechanisms on the pay of Chief Executive Officers (CEOs) using a sample of major French listed companies for the 2009–2011 period. The results show that CEO pay is negatively associated with the presence of a family CEO and positively associated with board size, busy directors, board meetings, and compensation committee independence. We provide further evidence that CEO compensation increases with firm size, and both present and past performance. Our study casts doubt on the effectiveness of formal board attributes in constraining CEO compensation.

Compensation Committees and CEO Compensation Incentives in U.S. Entrepreneurial Firms

2004 ◽  
Vol 16 (1) ◽  
pp. 35-56 ◽  
Author(s):  
Martin J. Conyon ◽  
Lerong He
Keyword(s):  
Ceo Compensation ◽  
Theoretical Models ◽  
Power Model ◽  
Entrepreneurial Firms ◽  
Compensation Committee ◽  
Ceo Incentives ◽  
Optimal Contracting ◽  
Managerial Power ◽  
Ceo Pay ◽  
Contracting Model

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.

scholarly journals Board Committees, CEO Compensation, and Earnings Management

2009 ◽  
Vol 84 (3) ◽  
pp. 869-891 ◽  
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.

Corporate governance and chief executive officer compensation

2008 ◽  
Vol 8 (2) ◽  
pp. 141-152 ◽  
Author(s):  
Steven T. Petra ◽  
Nina T. Dorata
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Board Structure ◽  
Content Type ◽  
Compensation Committee ◽  
The Us ◽  
Low Performance ◽  
And Control

PurposeThis paper aims to examine whether there is an association between the level of performance‐based incentives offered to CEOs and the composition of firms' boards of directors and the compensation committee.Design/methodology/approachUnivariate tests are used to test the relation between the level of performance‐based incentives and corporate governance structures. A logistic regression analysis is used to predict the probability of CEOs receiving low performance‐based incentives when various characteristics of firms' boards of directors and compensation committees exist.FindingsThe authors find the presence of CEO duality reduces the likelihood of lower levels of performance‐based incentives offered to CEOs. Additionally, the authors find CEOs are more likely to receive lower levels of performance‐based incentives when the majority of the compensation committee members serve on less than three other boards, and when the size of the board is less than or equal to nine members.Research limitations/implicationsThis study is limited by the fact that the sample may not be representative of the general population of companies in the US.Practical implicationsShareholders who desire to keep CEO compensation levels low may consider supporting the separation of the positions of CEO and Chairperson of the Board, as well as supporting limiting the number of other boards directors may serve, and reducing or keeping the size of the board to a maximum of nine members.Originality/valueThe authors have documented an association between board structure and CEO compensation. It appears that company boards are able to monitor and control the compensation level offered to CEOs.

Growth options and relative performance evaluation

2016 ◽  
Vol 24 (1) ◽  
pp. 38-55
Author(s):  
Jianhui Huang ◽  
Ling Liu ◽  
Ingrid C. Ulstad
Keyword(s):  
Ceo Compensation ◽  
Performance Comparison ◽  
Managerial Compensation ◽  
Growth Options ◽  
Cross Sectional ◽  
Content Type ◽  
Compensation Committee ◽  
Performance Sensitivity ◽  
Non Linear ◽  
High Level

Purpose – The purpose of this study is to investigate the cross-sectional associations between growth options and the peer pay–performance sensitivity of CEO compensation. Design/methodology/approach – This study includes analytical analysis and multivariable regression analysis. Findings – It is predicted in this study that there is a non-linear concave relation between peer pay–performance sensitivity and a firm’s growth options. Results based on the executive compensation data from ExecuComp are consistent with the hypothesis presented in this study. Research limitations/implications – Future scholars need to consider the non-linear impact of growth options on peer pay–performance sensitivity when they conduct research related to CEO compensation by differentiating the company’s growth options to be at a low, medium and high level. In an industry, when a compensation committee decides on the peers for performance comparison purposes, the committee needs to make sure that the peer firms they select have similar operational environments, for example, they face similar growth options (e.g. low, medium or high) and idiosyncratic variances. Practical implications – This study contributes to the managerial compensation literature by revealing the important role growth options, as well as idiosyncratic variances, play on peer pay–performance sensitivity. The results of this study have implications for both future researchers as well as industrial practitioners. Social implications – It gives guidance on designing CEO compensation contracts. Originality/value – This is an original work from the coauthors listed on this study.

Paying by Donating: Corporate Donations Affiliated with Independent Directors

2020 ◽  
Author(s):  
Ye Cai ◽  
Jin Xu ◽  
Jun Yang
Keyword(s):  
Ceo Compensation ◽  
Large Fraction ◽  
Poor Performance ◽  
Independent Directors ◽  
Committee Chair ◽  
Compensation Committee ◽  
Suggestive Evidence

Abstract Corporate donations to charities affiliated with the board’s independent directors (affiliated donations) are large and mostly undetected due to lack of formal disclosure. Affiliated donations may impair independent directors’ monitoring incentives. CEO compensation is on average 9.4% higher at firms making affiliated donations than at other firms, and it is much higher when the compensation committee chair or a large fraction of compensation committee members are involved. We find suggestive evidence that CEOs are unlikely to be replaced for poor performance when firms donate to charities affiliated with a large fraction of the board or when they donate large amounts.

Dialogue: CEO Compensation

2011 ◽  
Vol 21 (4) ◽  
pp. 679-691 ◽  
Author(s):  
Robert Kolb ◽  
Jeffrey Moriarty
Keyword(s):  
Board Of Directors ◽  
Ceo Compensation ◽  
Fiduciary Duty ◽  
Market Process ◽  
Minimum Level ◽  
Compensation Committee ◽  
The Board Of Directors ◽  
Wage Negotiation

ABSTRACT:In this journal, Jeffrey Moriarty argued that CEOs must refuse to accept compensation above the minimum compensation that will induce them to accept and perform their jobs. Acting otherwise, he maintains, violates the CEO’s fiduciary duty, even for a CEO new to the firm. I argue that Moriarty’s conclusion rests on a failure to adequately distinguish when a person acts as a fiduciary from when she acts on her own account as a person. Further, Moriarty’s argument assumes that the CEO knows this minimum level of compensation. However, we learn the suitability of compensation only through the market process of wage negotiation, not through some process of introspection. I conclude that a CEO who abstains from interfering with the board of directors and its compensation committee is morally free to negotiate for the highest wage available.

Institutional Activism Types and CEO Compensation: A Time-Series Analysis of Large Canadian Corporations †

2007 ◽  
Vol 35 (1) ◽  
pp. 5-36 ◽  
Author(s):  
Shamsud D. Chowdhury ◽  
Eric Zengxiang Wang
Keyword(s):  
Ceo Compensation ◽  
Stock Exchange ◽  
Board Composition ◽  
Toronto Stock Exchange ◽  
Board Chair ◽  
Compensation Committee ◽  
Board Monitoring ◽  
Contingent Compensation ◽  
Institutional Activism ◽  
Using Data

Using data from the Toronto Stock Exchange 300 companies for a 7-year period, the authors examine the role that institutional activism types and three salient board monitoring mechanisms— CEO/board chair split, board composition, and compensation committee independence—play in influencing CEO contingent compensation in Canada. The authors find that the effect of institutional activism, especially proxy based, is stronger on contingent CEO compensation and that its effects span a longer time. As opposed to the interactions of cumulative proxy-based activism with any of the three monitoring mechanisms, the interactions of cumulative non-proxy-based activism with both CEO/board chair split and compensation committee independence appear to influence CEO contingent compensation. The study's implications are given.

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