The Australian Stock Exchange's Principles of Good Corporate Governance and Best Practice Recommendations require all listed companies that do not have a majority of independent directors to explain their reasons. We show that independent (outside) directors seem to add value only where their firms have substantial amounts invested in growth options. In these circumstances, outside directors add significant value in their first year on the board and where they have at least three other board positions.

CEO compensation has been well documented in the US in the academic and professional literature. However, despite widespread attention by the Australian business community and the federal government to this issue, descriptive evidence on Australian CEOs' compensation contracts is very sparse. Using a sample of large Australian firms for three years, this study provides the first detailed descriptive evidence on both the levels and structures of Australian CEO compensation. The study compares these findings with those from the US and reveals significant variations in CEO compensation contracts between the Australian and US markets.

2.3 Sample Selection 2.4 Key Descriptive Results 2.4.1 Overall Sample Characteristics 2.4.2 Compensation characteristics by industry and group 2.4.3 Level of CEO Compensation and Firm Characteristics-Appendix 2.B 2.4.4 Option grant characteristics 2.5 Implications of Findings