TITLE

Corporate governance, compensation consultants, and CEO pay levels

AUTHOR(S)
Armstrong, Christopher; Ittner, Christopher; Larcker, David
PUB. DATE
June 2012
SOURCE
Review of Accounting Studies;Jun2012, Vol. 17 Issue 2, p322
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This study investigates the relation between corporate governance and CEO pay levels and the extent to which the higher pay found in firms using compensation consultants is related to governance differences. Using proxy statement disclosures from 2,110 companies, we find that CEO pay is higher in firms with weaker governance and that firms with weaker governance are more likely to use compensation consultants. CEO pay remains higher in clients of consulting firms even after controlling for economic determinants of compensation. However, when consultant users and non-users are matched on both economic and governance characteristics, differences in pay levels are not statistically significant, indicating that governance differences explain much of the higher pay in clients of compensation consultants. We find no support for claims that CEO pay is higher in potentially 'conflicted' consultants that also offer additional non-compensation-related services.
ACCESSION #
74715299

 

Related Articles

  • Discussant Comment on An Examination of the Effect of CEO Social Ties and CEO Reputation on Nonprofessional Investors' Say-on-Pay Judgments, by Steve Kaplan, Janet Samuels, Jeffrey Cohen. Schmidt, Regan // Journal of Business Ethics;Jan2015, Vol. 126 Issue 1, p119 

    The article comments on a paper in the current issue entitled "An Examination of the Effect of CEO Social Ties and CEO Reputation on Nonprofessional Investors’ Say-on-Pay Judgments" by Steve Kaplan, Janet Samuels and Jeffrey Cohen (KSC). In their work KSC examine how social ties between...

  • CEO compensation: Turning conventional wisdom on its head (almost). Chowdhury, Shamsud D.; Wang, Eric // Ivey Business Journal;Nov/Dec2004, Vol. 69 Issue 2, p1 

    Contrary to conventional wisdom, a CEO's fixed salary, or non-contingent pay, has not increased in recent years. In fact, a CEO's fixed salary, as a proportion of his or her total compensation, has been decreasing. Moreover, the greater the independence of a compensation committee, the more a...

  • Are boards and CEOs accountable for the right level of work? Van Clief, Mark // Ivey Business Journal;May/Jun2004, Vol. 68 Issue 5, p1 

    The court of public opinion says that CEOs are overpaid. This author does not have an argument with that per se, but he does argue, compellingly, that CEOs are overpaid not necessarily because their company under-performs, but because they are being paid for work that is, literally, beneath...

  • Évolution de la rémunération des dirigeants et transformation de leur légitimité. Chapas, Benjamin // Revue des Sciences de Gestion;jan-avr2005, Issue 211-212, p143 

    Research on CEO compensation has a long academic history and the subject has recently sparked the interest of the public and the media who make of it a compelling part of current economic trends. This enthusiasm is reinforced by the generalization of stock-options, an element crucial to the...

  • CEO compensation up by 12.7% in '07. Burr, Barry B. // Pensions & Investments;1/7/2008, Vol. 36 Issue 1, p19 

    The article reports that according to a study of data from 3,068 U.S. corporations, chief executive officer total compensation increased a median 12.64% in the past year. The study, the fifth annual by the Corporate Library LLC, is based on proxy-statement filings between October 6, 2006, and...

  • CEOs SEE SMALL PAY BUMP IN '12, BUT CRITICS STILL CITE SIZABLE PAY DISCREPANCY. BRESLIN, MEG MCSHERRY // Workforce Management;Jun2013, Vol. 92 Issue 6, p6 

    The article reports that according to a new analysis of company proxy statements by Towers Watson & Co., total pay for chief executive officers ( CEOs) in the U.S. corporations grew only slightly in 2012. It suggests that boards of directors may be taking a more conservative approach to...

  • What happens to CEO compensation following turnover and succession? Elsaid, Eahab; Davidson, Wallace N. // Quarterly Review of Economics & Finance;May2009, Vol. 49 Issue 2, p424 

    Abstract: When boards hire CEOs, the board and successor CEO have an opportunity to redesign the predecessor''s compensation contract. The CEO''s relative bargaining power will influence the outcome of compensation negotiations. Analyzing 508 successions, we find that total compensation of...

  • Looking Hard at Executive Pay. Marshall, Jeffrey // Financial Executive;May2006, Vol. 22 Issue 4, p36 

    The article reports on the movement to control executive compensation. Disclosure rules regarding executive compensation, which have been proposed by the Securities and Exchange Commission (SEC) are described. The propositions will force public companies to look intently at revising their proxy...

  • Corporate Pay. Barlas, Stephen // Financial Executive;Apr2008, Vol. 24 Issue 3, p26 

    The article reports on the conversation that Tom Lehner, director of public policy for the Business Roundtable, had with the chief executive officer (CEO) of a Fortune 500 company regarding executive pay in the U.S. It states that it the CEO's firm, like 350 other, received a letter the...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics