TY - JOUR
T1 - CEO compensation, IOS and the role of corporate governance
AU - Elloumi, Fathi
AU - Gueyié, Jean Pierre
PY - 2001/6/1
Y1 - 2001/6/1
N2 - The empirical relationship between chief executive officer (CEO) compensation, the investment opportunity set (IOS) and corporate governance mechanisms is analyzed for a sample of 415 Canadian firms in 1997. Results indicate that firms with high IOS pay higher levels of total compensation to their CEOs. In addition, CEOs of high IOS derive a larger proportion of their compensation from performance-contingent forms of pay such as bonuses, stock option grants and long-term incentive plans. However, CEOs with weak boards of directors are compensated more than CEOs with powerful boards. Contrary to our expectation, we find that in high IOS firms with weak boards of directors, CEOs seek to have higher proportions of contingent forms of pay in their compensation. An implication of this result is that contingent compensation practices may be a more value-enhancing form of remuneration for CEOs.
AB - The empirical relationship between chief executive officer (CEO) compensation, the investment opportunity set (IOS) and corporate governance mechanisms is analyzed for a sample of 415 Canadian firms in 1997. Results indicate that firms with high IOS pay higher levels of total compensation to their CEOs. In addition, CEOs of high IOS derive a larger proportion of their compensation from performance-contingent forms of pay such as bonuses, stock option grants and long-term incentive plans. However, CEOs with weak boards of directors are compensated more than CEOs with powerful boards. Contrary to our expectation, we find that in high IOS firms with weak boards of directors, CEOs seek to have higher proportions of contingent forms of pay in their compensation. An implication of this result is that contingent compensation practices may be a more value-enhancing form of remuneration for CEOs.
KW - Corporate governance
KW - Directors
KW - Investment
KW - Remuneration
KW - Top management
UR - http://www.scopus.com/inward/record.url?scp=84986065032&partnerID=8YFLogxK
U2 - 10.1108/EUM0000000005487
DO - 10.1108/EUM0000000005487
M3 - Journal Article
AN - SCOPUS:84986065032
SN - 1472-0701
VL - 1
SP - 23
EP - 33
JO - Corporate Governance: The international journal of business in society
JF - Corporate Governance: The international journal of business in society
IS - 2
ER -