The CEO pay slice: Managerial power or efficient contracting? Some indirect evidence

2017 ◽  
Vol 13 (1) ◽  
pp. 69-87 ◽  
Author(s):  
Martin Bugeja ◽  
Zoltan Matolcsy ◽  
Helen Spiropoulos
Keyword(s):  
Indirect Evidence ◽  
Managerial Power ◽  
Ceo Pay

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.

On the relation between managerial power and CEO pay

2020 ◽  
Vol 69 (2-3) ◽  
pp. 101300
Author(s):  
Robert F. Göx ◽  
Thomas Hemmer
Keyword(s):  
Managerial Power ◽  
Ceo Pay

CEO pay disparity: Efficient contracting or managerial power?

2019 ◽  
Vol 54 ◽  
pp. 168-190 ◽  
Author(s):  
Thi Thanh Nha Vo ◽  
Jean Milva Canil
Keyword(s):  
Pay Disparity ◽  
Managerial Power ◽  
Ceo Pay

The determinants of CEO compensation: new insights from United States

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Bouteska ◽  
Salma Mefteh-Wali
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Ceo Compensation ◽  
Future Research ◽  
Ceo Power ◽  
Content Type ◽  
Managerial Power ◽  
The Us ◽  
Ceo Pay ◽  
The Impact

PurposeThe purpose of this paper is to examine the determinants of CEO compensation for sample of the US firms. It emphasizes the presence of executive compensation persistence and the importance of CEO power besides performance while setting CEO pay.Design/methodology/approachThe empirical analysis is conducted on a large sample of US firms during the period 2006–2016. It is based on the generalized method of moments (GMM) models to assess the impact of numerous factors on CEO compensation.FindingsThe main findings reveal that firm performance proxied by accounting-based proxies, as well as market-based proxies, plays a significant role in explaining variations in levels of executive compensation. Moreover, there is a significant persistence in executive compensation among the US sample firms. The authors also document that poor governance conditions (managerial power hypothesis) lead to high compensation levels offered to CEO.Research limitations/implicationsAt the end, without a doubt, the analysis has some limitations that prompt the authors to consider future research directions. One future research avenue that can help better explain the effect of firm performance on the CEO compensation is to study this issue using an international sample to determine whether country-level characteristics (e.g. creditor rights, shareholder rights and the enforcement climate) can influence this relationship. Furthermore, it can be worthwhile to deepen the analysis of CEO power and its impact on CEO compensation. It will be interesting to emphasize how the CEO power interacts with the other governance characteristics and some CEO attributes as CEO gender.Practical implicationsThe paper's findings have implications for practitioners, policymakers and regulatory authorities. First, the findings inform regulators that performance is not the only determinant of CEO pay level. This may warrant increased firm disclosure of the details of the pay structure. Second, the study offers insights to policymakers and members of boards of directors interested in enhancing the design of executive compensation and internal corporate governance, to better align managerial incentives to shareholder interests. Firms should strengthen the board independence and properly constitute the board committees (compensation, risk, nomination…).Originality/valueThis paper presents a comprehensive overview of the CEO compensation determinants. It supplements the classic pay-for-performance sensitivity predictions with insights gained from the dynamics of wage setting theory and managerial power theory. The authors develop a composite index to measure the CEO power in order to test the impact of CEO attributes on CEO pay. Additionally, it verifies whether the determinants of CEO pay depend on firm age and size.

scholarly journals Does a “Ceo Chairman” Guarantee Better Performance from a Firm?

2016 ◽  
Vol 7 (3) ◽  
pp. 145-160
Author(s):  
Pavel Srbek ◽  
Ludwig O. Dittrich
Keyword(s):  
Data Model ◽  
Chief Executive ◽  
Single Equation ◽  
Managerial Compensation ◽  
Ceo Power ◽  
Managerial Power ◽  
The Us ◽  
Ceo Pay ◽  
Parameter Values ◽  
The Relationship

Abstract This paper provides a brief review of the state of knowledge in the field of agency theory. The managerial power approach assumes that a chief executive officer is able to affect the scale of his or her pay. However, Kaplan (2012) and others see a different picture of the corporate-governance landscape, hence they provide certain market-based explanations for high compensation. Our paper examines the relationship between a firm’s performance and the amount of managerial compensation, and the ability of a CEO to affect a board’s decision regarding his or her total compensation. The dataset consists of 75 companies traded in the capital market in the US. Our panel dataset covers a 10-year period from 2004 to 2013. We developed a single equation panel data model. The resulting parameter values provide a different picture of CEO power and the interconnection between a firm’s performance and CEO pay in both sectors.

CEO Pay, Managerial Power, and SFAS 123(R)

2012 ◽  
Vol 87 (6) ◽  
pp. 2151-2179 ◽  
Author(s):  
Terrance R. Skantz
Keyword(s):  
Ceo Compensation ◽  
Data Availability ◽  
Best Interest ◽  
Managerial Power ◽  
Ceo Pay

ABSTRACT This study presents evidence that option expensing, whether voluntary under SFAS 123 or mandatory under SFAS 123(R), is associated with changes in CEO compensation that are beneficial to shareholders. I find that the reporting benefits of aggregate-employee option grants under SFAS 123 are associated with the change in the mix of CEO option grants and stock grants that occurs after SFAS 123(R), suggesting that reporting benefits of option grants may have influenced some CEO compensation decisions. Additionally, I find that the reduction in CEO pay after SFAS 123(R) is greater when shareholders have more power to act in their own best interest and when there is evidence of pre-expensing CEO compensation rents. The findings suggest that SFAS 123 may have encouraged inefficient, CEO-preferential pay practices and that SFAS 123(R) may have contributed to a reduction in CEO compensation inefficiencies. Data Availability: All data are publicly available.

scholarly journals Managerial Power and CEO Pay

2017 ◽  
Author(s):  
Robert F. Goex ◽  
Thomas Hemmer
Keyword(s):  
Managerial Power ◽  
Ceo Pay

scholarly journals Director’s monitoring effectiveness and CEO compensation

2014 ◽  
Vol 11 (2) ◽  
pp. 136-143
Author(s):  
Chee-Wooi Hooy ◽  
Chwee-Ming Tee
Keyword(s):  
Corporate Governance ◽  
Best Practices ◽  
Independent Directors ◽  
Optimal Contract ◽  
Empirical Results ◽  
Financial Firms ◽  
Minimum Standards ◽  
Compensation Package ◽  
Managerial Power ◽  
Ceo Pay

This paper examines the monitoring effectiveness of independent and non independent directors on a CEO pay-performance of Malaysian financial firms from 2002-2009. It is based on the agency and managerial power theory. The former states that under optimal contract pay should be aligned to performance, while the latter postulates that powerfully entrenched CEO can influence captive directors to award generous compensation package. Our empirical results show (1) a high CEO pay-dividend sensitivity while market measurement plays no part in influencing CEO pay; (2) both the independent and non independent directors have failed in their fiduciary role as internal monitor, suggesting the dominance of managerial power in the board; (3) the appointment of independent directors is merely a move to fulfill the minimum standards of the best practices of corporate governance.

Sign in / Sign up

Export Citation Format

Share Document