Incentive features in CEO compensation in the banking industry
This article examines the incentive features of top-management compensation in the banking industry. Economic theory suggests that the compensation structures for bank management should have low pay-performance sensitivity because of the high leverage of banks and the fact that banks are regulated institutions. In accordance with this school of thought, the authors find that the pay-performance sensitivity for bank CEOs is lower than it is for CEOs of manufacturing firms. This difference is attributable largely to the difference in debt ratios. The authors also find that banks' pay-performance sensitivity declines with bank size.
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Volume (Year): (2003)
Issue (Month): Apr ()
Pages: 109-121
| Handle: | RePEc:fip:fednep:y:2003:i:apr:p:109-121:n:v.9no.1 |
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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.:
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" A Survey of Corporate Governance,"
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99-11, Federal Reserve Bank of San Francisco.
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- Mark J. Flannery & Simon H. Kwan & Mahendrarajah Nimalendran, 1997. "Market evidence on the opaqueness of banking firms' assets," Proceedings 560, Federal Reserve Bank of Chicago.
- George P. Baker & Brian J. Hall, 1998. "CEO Incentives and Firm Size," NBER Working Papers 6868, National Bureau of Economic Research, Inc.
- Kose John & Lemma W. Senbet, 1997. "Corporate Governance and Board Effectiveness," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-045, New York University, Leonard N. Stern School of Business-.
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