Executive Compensation: Pay-for-Performance in High-Technology Firms
This study examines the relationship between corporate performance and the Chief Executive Officer (CEO) compensation in high-technology firms in the S&P 500. The total short- and long-term CEO compensation in high-technology was compared with other industrial sectors from standard classification codes and tested in terms of corporate performance. The ExecuComp database was used to find the variables and to create a sample of firms between 2004 and 2010. Important corporate performance variables are used in this work, such as assets, employees, sales, net income, and earnings per share (EPS), as reported by the firms for each year. A panel data GLS with a fixed effect model for time is estimated that describes total compensation for the period between 2004 and 2010. The result was aligned with the theory of executive compensations to address agency problems and to examine CEO pay-for-performance. The main objective of this paper is to consistently demonstrate that the performance is determined for the total CEO compensation for short- and long-term periods and to examine whether the total remuneration paid to CEOs in high-technology firms in the S&P 500 is related to corporate finance. This work provides a better understanding of the relationship between compensation and performance in high-technology firms. Results suggest that high-tech firms tend to use more sophisticated performance measurements to determine CEO compensation.
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