The Interplay between Director Compensation and CEO Compensation

This paper empirically examines the determinants of director compensation and CEO compensation and investigates whether director compensation has an effect on CEO compensation. Based on 713 firms (or 2,852 firm-years) between 2007 and 2010, we find that CEO tenure is related to the ability of the CEO in influencing the board's pay determination process. However, sitting on the board does not strengthen the CEO's power over the board during the pay negotiation process. More importantly, we find evidence of a “mutual back scratching” relationship between CEO and the board of directors. Excess director compensation and CEO compensation are positively related. The results thus support Jensen's (1993) argument that as the CEO is involved in the selection of directors, the monitoring role of the board of directors becomes less effective

MoreLess

Year of publication:	2014
Authors:	Lin, Dan
Other Persons:	Lin, Lu (contributor)
Publisher:	[2014]: [S.l.] : SSRN
Subject:	Führungskräfte \| Managers \| Managervergütung \| Executive compensation \| Leistungsentgelt \| Performance pay \| Vergütungssystem \| Compensation system \| Leistungsanreiz \| Performance incentive \| Vorstand \| Executive board

Extent:	1 Online-Ressource (16 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: The International Journal of Business and Finance Research, Vol. 8 (2) pp. 11-26, 2014 Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments 2014 erstellt
Classification:	J33 - Compensation Packages; Payment Methods ; M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs)
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013063013