Pay at the Executive Suite: How do U.S. Banks Compensate their Top Management Teams?
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 CEOâ€™s pay is significantly lower than in other senior managersâ€™ pay, and CEOâ€™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.
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