Wolves in the Hen-House? The Consequences of Formal CEO Involvement in the Executive Pay-Setting Process
New Zealand firms exhibit significant variation in the extent to which they formally involve CEOs in the executive pay-setting process: a considerable number sit on the compensation committee, while others are excluded from the board altogether. Using 1997-2005 data, we find that CEOs who sit on the compensation committee obtain generous annual pay rewards that have low sensitivity to poor performance shocks. By contrast, CEOs who are not board members receive pay increments that have low mean and high sensitivity to firm performance. Moreover, the greater the pay increment attributable to CEO involvement in the pay-setting process, the weaker is subsequent firm performance over one, three- and five-year periods.
|Date of creation:||29 Jul 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 64 3 369 3123 (Administrator)
Fax: 64 3 364 2635
Web page: http://www.econ.canterbury.ac.nz
More information through EDIRC
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.:
- Andjelkovic, Aleksandar & Boyle, Glenn & McNoe, Warren, 2002. "Public disclosure of executive compensation: Do shareholders need to know?," Pacific-Basin Finance Journal, Elsevier, vol. 10(1), pages 97-117, January.
- Rajesh K. Aggarwal & Andrew A. Samwick, 1999.
"The Other Side of the Trade-off: The Impact of Risk on Executive Compensation,"
Journal of Political Economy,
University of Chicago Press, vol. 107(1), pages 65-105, February.
- Rajesh Aggarwal & Andrew A. Samwick, 1998. "The Other Side of the Tradeoff: The Impact of Risk on Executive Compensation," NBER Working Papers 6634, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:cbt:econwp:10/45. 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: (Albert Yee)
If references are entirely missing, you can add them using this form.