CEO Compensation for Major US Companies in 2006
The purpose of this paper is to update the empirical investigation into pay-setting practices of major U.S. companies. While it enters the debate on the determinants of CEO compensation, our approach is explanatory rather than prescriptive. Our empirical analysis is based on a sample of 236 major U.S. firms from the 2006 WSJ/Mercer CEO Compensation Survey. We run a series of cross-sectional regressions that consider the effects of performance indicators on total direct compensation and the cash bonus. We also test the effects on non-performance variables, which represent potential agency problems involved with CEO compensation. We find that CEO compensation is tied to firm performance, but whether the link has increased or decreased in strength over time remains unclear. We also determine that non-performance related factors contribute significantly to CEO compensation: CEOs who are also chairmen of the board make 35% more than non-chairmen, and companies that grant more stock options tend to have 30% lower dividend yields.
|Date of creation:||Jan 2008|
|Contact details of provider:|| Postal: 366 Galvez Street, Stanford, California 94305-6015|
Phone: (650) 725-1874
Fax: (650) 723-8611
Web page: http://siepr.stanford.edu
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:07-028. 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: (Anne Shor)
If references are entirely missing, you can add them using this form.