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CEO cash compensation determinants: an empirical examination of US airlines†

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  • Zheng Gu
  • Hyunjoon Kim

Abstract

This study empirically investigated the determinants of cash compensation for chief executive officers (CEOs) for US airlines in the post-9.11 period. After an analysis of 53 firm-year observations from 2002 to 2004, we found that the airline CEO cash compensation was positively correlated with the size and revenue efficiency of an airline firm whereas growth, debt use, profitability, and stock performance were irrelevant to the compensation. Larger airlines with better revenue-generating ability tended to offer high cash compensation to their CEOs. Our findings suggest that the pay-for-performance principle has yet to be fully implemented in the airlines industry. To minimize agency problems and enhance the firm value of US airlines, CEO compensation should be based not only on revenue efficiency but also on profitability and stock performance. -super-†This work was supported by a Dong-A University research grant.

Suggested Citation

  • Zheng Gu & Hyunjoon Kim, 2009. "CEO cash compensation determinants: an empirical examination of US airlines†," The Service Industries Journal, Taylor & Francis Journals, vol. 29(7), pages 995-1005, July.
    • Handle: RePEc:taf:servic:v:29:y:2009:i:7:p:995-1005
    DOI: 10.1080/02642060902749823
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    Cited by:

    1. Yaghoub Abdi & Xiaoni Li & Xavier Càmara-Turull, 2023. "Firm value in the airline industry: perspectives on the impact of sustainability and Covid-19," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-24, December.

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