IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Pay at the executive suite: How do US banks compensate their top management teams?

Author Info

Listed author(s):
  • Ang, James
  • Lauterbach, Beni
  • Schreiber, Ben Z.

Abstract

The study examines how 166 U.S. banks compensated their top management teams (top 4-5 executives in each bank) during 1993-1996. We observe two tiers of compensation in the executive suite: CEO and the rest. CEOs are paid more, especially in performance contingent compensation. The weight of base salary in CEO’s pay is significantly lower than in other senior managers’ pay, and CEO’s pay performance elasticity is significantly higher. Beyond the CEO, top executives have a similar structure of compensation and similar pay performance elasticities. Our evidence is consistent with agency theory, and with several labor economics models.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0378-4266(01)00165-0
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 26 (2002)
Issue (Month): 6 (June)
Pages: 1143-1163

as
in new window

Handle: RePEc:eee:jbfina:v:26:y:2002:i:6:p:1143-1163
Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Crawford, Anthony J & Ezzell, John R & Miles, James A, 1995. "Bank CEO Pay-Performance Relations and the Effects of Deregulation," The Journal of Business, University of Chicago Press, vol. 68(2), pages 231-256, April.
  2. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
  3. Gallant, A. Ronald & Jorgenson, Dale W., 1979. "Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 275-302.
  4. James S. Ang & Shmuel Hauser & Beni Lauterbach, 1998. "Contestability and Pay Differential in the Executive Suites," European Financial Management, European Financial Management Association, vol. 4(3), pages 335-360.
  5. Mehran, Hamid, 1995. "Executive compensation structure, ownership, and firm performance," Journal of Financial Economics, Elsevier, vol. 38(2), pages 163-184, June.
  6. Hubbard, R. Glenn & Palia, Darius, 1995. "Executive pay and performance Evidence from the U.S. banking industry," Journal of Financial Economics, Elsevier, vol. 39(1), pages 105-130, September.
  7. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
  8. repec:sae:ilrrev:v:43:y:1990:i:3:p:30-51 is not listed on IDEAS
  9. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
  10. Houston, Joel F. & James, Christopher, 1995. "CEO compensation and bank risk Is compensation in banking structured to promote risk taking?," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 405-431, November.
  11. Brian J. Hall & Jeffrey B. Liebman, 1998. "Are CEOs Really Paid Like Bureaucrats?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 653-691.
  12. Main, Brian G M & O'Reilly, Charles A, III & Wade, James, 1993. "Top Executive Pay: Tournament or Teamwork?," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 606-628, October.
  13. Garen, John E, 1994. "Executive Compensation and Principal-Agent Theory," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1175-1199, December.
  14. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563 Elsevier.
  15. Scott Schaefer, 1998. "The Dependence Of Pay--Performance Sensitivity On The Size Of The Firm," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 436-443, August.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. Maretno Harjoto & Ha-Chin Yi & Tosporn Chotigeat, 2012. "Why do banks acquire non-banks?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(3), pages 587-612, July.
  2. Chen, Yenn-Ru & Ma, Yulong, 2011. "Revisiting the risk-taking effect of executive stock options on firm performance," Journal of Business Research, Elsevier, vol. 64(6), pages 640-648, June.
  3. Eufinger, Christian & Gill, Andrej, 2016. "Incentive-based capital requirements," SAFE Working Paper Series 9 [rev.], Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
  4. Matousek, Roman & Tzeremes, Nickolaos G., 2016. "CEO compensation and bank efficiency: An application of conditional nonparametric frontiers," European Journal of Operational Research, Elsevier, vol. 251(1), pages 264-273.
  5. João Paulo Vieito & António Cerqueira & Elísio Brandão & Walayet A. Khan, 2009. "Executive Compensation: the Finance Perspective," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(1), pages 3-32.
  6. Eufinger, Christian & Gill, Andrej, 2013. "Basel III and CEO compensation in banks: Pay structures as a regulatory signal," SAFE Working Paper Series 9, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
  7. Ahmed Ayadi & Sami Hammami, 2016. "Efficiency Measurement and Determinants of the Public Transport Industry in Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(2), pages 613-629, June.
  8. Lin Guo & Abu Jalal & Shahriar Khaksari, 2015. "Bank executive compensation structure, risk taking and the financial crisis," Review of Quantitative Finance and Accounting, Springer, vol. 45(3), pages 609-639, October.
  9. Bouaziz, Zied & Triki, Mohamed, 2012. "L’impact du conseil d’administration sur la performance financière des entreprises Tunisiennes
    [The impact of the Board of directors on the financial performance of Tunisian companies]    ," MPRA Paper 38672, University Library of Munich, Germany.
  10. Bouaziz, Zied & Triki, Mohamed, 2012. "L’impact de la présence des comités d’audit sur la performance financière des entreprises tunisiennes
    [The impact of the presence of audit committees on the financial performance of Tunisian compan    ," MPRA Paper 42175, University Library of Munich, Germany.
  11. Ayyaz AHMAD* & Saima SARWAR* & M. Wasif SIDDIQI*, 2016. "Impact of CEOs Pay Disparity on Stability of Banks: Evidence from Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 26(1), pages 53-76.
  12. Bai, Gang & Elyasiani, Elyas, 2013. "Bank stability and managerial compensation," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 799-813.
  13. Ahmed AYADI, 2014. "Impact of the governance system efficiency on the performance of the regional transport companies in Tunisia," E3 Journal of Business Management and Economics., E3 Journals, vol. 5(2), pages 039-051.
  14. Karima Bouaiss & Christine Marsal, 2009. "Les mécanismes internes de gouvernance dans les banques:un état de l'art," Revue Finance Contrôle Stratégie, revues.org, vol. 12(1), pages 93-126, March.
  15. Anderson, Christopher W. & Becher, David A. & Campbell, Terry II, 2004. "Bank mergers, the market for bank CEOs, and managerial incentives," Journal of Financial Intermediation, Elsevier, vol. 13(1), pages 6-27, January.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:26:y:2002:i:6:p:1143-1163. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.