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Cited by 381

The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.

CEO Compensation and Firm Performance: an Empirical Investigation of UK Panel Data

Open access
Ozkan, Neslihan·2011·European Financial Management
DOI 10.1111/j.1468-036x.2009.00511.x
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Abstract

This paper examines the link between CEO pay and performance employing a unique, hand‐collected panel data set of 390 UK non‐financial firms from the FTSE All Share Index for the period 1999–2005. We include both cash (salary and bonus) and equity‐based (stock options and long‐term incentive plans) components of CEO compensation, and CEO wealth based on share holdings, stock option and stock awards holdings in our analysis. In addition, we control for a comprehensive set of corporate governance variables. The empirical results show that in comparison to the previous findings for US CEOs, pay‐performance elasticity for UK CEOs seems to be lower; pay‐performance elasticity for UK CEOs is 0.075 (0.095) for cash compensation (total direct compensation), indicating that a ten percentage increase in shareholder return corresponds to an increase of 0.75% (0.95%) in cash (total direct) compensation. We also find that both the median share holdings and stock‐based pay‐performance sensitivity are lower for UK CEOs when we compare our findings with the previous findings for US CEOs. Thus, our results suggest that corporate governance reports in the UK, such as the Greenbury Report (1995) that proposed CEO compensation be more closely linked to performance, have not been totally effective. Our findings also indicate that institutional ownership has a positive and significant influence on CEO pay‐performance sensitivity of option grants. Finally, we find that longer CEO tenure is associated with lower pay‐performance sensitivity of option grants suggesting the entrenchment effect of CEO tenure.

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Cites

Research works printed but not linked: 34

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Metadata

Authors
Ozkan, N.
Venue
European Financial Management
Publisher
Wiley
Published
2011-02-28
Volume
17
Issue
2
Pages
260-285
ISSN
  • 1354-7798 (ISSN-L)
  • 1468-036X
DOI
10.1111/j.1468-036x.2009.00511.x
OpenAlex
W3122057977
Cited by
381
References
3
FWCI
8.21
Type
journal article
Language
en
Open access
green
Licence
onlinelibrary.wiley.com/termsAndConditions#vor (vor)

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