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Asymmetric benchmarking of pay in firms

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  • Francis, Bill
  • Hasan, Iftekhar
  • John, Kose
  • Sharma, Zenu

Abstract

This paper examines whether asymmetric benchmarking of pay exists for vice presidents (VPs). Using ExecuComp data for 1992–2007, we find that companies reward VPs for good luck but do not penalize them for bad luck. However, asymmetric benchmarking of VP pay is mitigated by governance, CEO power, gender, and industry factors. The presence of asymmetric benchmarking of pay could suggest that managers are involved in skimming, or it could mean that firms insulate managers from poor firm performance to prevent them from accessing outside opportunities. We find that unlike CEOs, asymmetric benchmarking of pay for VPs is not consistent with the skimming hypothesis.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Corporate Finance.

Volume (Year): 23 (2013)
Issue (Month): C ()
Pages: 39-53

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Handle: RePEc:eee:corfin:v:23:y:2013:i:c:p:39-53

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Web page: http://www.elsevier.com/locate/jcorpfin

Related research

Keywords: CEO compensation; VP compensation; Benchmarking; Pay for luck;

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References

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