CEO Compensation and Board Structure

Chhaochharia, Vidhi; Grinstein, Yaniv

doi:10.1111/j.1540-6261.2008.01433.x

Cited by 484 publications

(310 citation statements)

References 49 publications

(72 reference statements)

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“…Finally, the empirical evidence is generally consistent with these theoretical predictions relating to the effect of nomination and remuneration committees on the PPS (Benito & Conyon 1999;Sun & Cahan, 2009). For example, and consistent with Vefeas (1999), Chhaochharia and Grinstein (2009) document a positive link between nomination committees and the quality of new director appointments in the US. Similarly, Conyon (1997), Sapp (2008) and Conyon andHe (2011, 2012) find that the level of CEO pay is significantly lower and the PPS significantly higher in companies with independent remuneration committees.…”

Section: The Effect Of Board Structure (Effectiveness) On the Ppsmentioning

confidence: 99%

“…However, and to the extent that powerful CEOs can handpick members of the board and RCOM, their monitoring effectiveness will depend on the independence of the RCOM's members from the CEO (Chhaochharia & Grinstein, 2009). As director independence depends heavily on the nominating authority (Vefeas, 1999), in companies that do not have independent nomination committee (NCOM), whereby director selection is dominated by their CEOs, the effectiveness of the RCOM in setting optimal CEO pay may be seriously undermined (Bebchuk & Fried, 2003;Conyon & He, 2011, 2012.…”

Section: The Effect Of Board Structure (Effectiveness) On the Ppsmentioning

confidence: 99%

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Executive pay and performance: the moderating effect of CEO power and governance structure

Ntim

Lindop

Thomas

et al. 2017

The International Journal of Human Resource Management

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Executive pay and performance: the moderating effect of CEO power and governance structure. International Journal of Human Resource Management,(doi:10.1080/09585192.2017 This is the author's final accepted version.There may be differences between this version and the published version. You are advised to consult the publisher's version if you wish to cite from it.http://eprints.gla.ac.uk/121453/ Executive pay and performance: The moderating effect of CEO power and governance structure AbstractThis paper examines the crucial question of whether chief executive officer (CEO) power and corporate governance (CG) structure can moderate the pay-for-performance sensitivity (PPS) using a large up-to-date South African dataset. Our findings are three-fold. First, when direct links between executive pay and performance are examined, we find a positive, but relatively small PPS. Second, our results show that in a context of concentrated ownership and weak board structures; the second-tier agency conflict (director monitoring power and opportunism) is stronger than the first-tier agency problem (CEO power and self-interest). Third, additional analysis suggests that CEO power and CG structure have a moderating effect on the PPS. Specifically, we find that the PPS is higher in firms with more reputable, founding and shareholding CEOs, higher ownership by directors and institutions, and independent nomination and remuneration committees, but lower in firms with larger boards, more powerful, and long-tenured CEOs. Overall, our evidence sheds new important theoretical and empirical insights on explaining the PPS with specific focus on the predictions of the optimal contracting and managerial power hypotheses. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, pay, and performance proxies.

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Section: The Effect Of Board Structure (Effectiveness) On the Ppsmentioning

confidence: 99%

Section: The Effect Of Board Structure (Effectiveness) On the Ppsmentioning

confidence: 99%

Executive pay and performance: the moderating effect of CEO power and governance structure

Ntim

Lindop

Thomas

et al. 2017

The International Journal of Human Resource Management

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“…Chhaochharia and Grinstein (2009) show that when new standards for board independence were introduced in the wake of corporate scandals in the early 2000s, CEO pay declined disproportionately at firms most affected by the new rules [10]. In a sample of IPO firms, Conyon and He (2004) find that CEOs with large stakeholders on the board (who are presumably stronger monitors) get pay packages tied more closely to firm performance (less cash and more equity) [11].…”

Section: Schools Of Thoughtmentioning

confidence: 99%

Determinants of CEO Compensation before and after the Financial Crisis

Sonenshine¹,

Larson²,

Cauvel³

2016

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This paper revisits the determinants of CEO compensation using recent data (covering 125 firms from 2003 to 2012). We focus in particular on how CEO pay changed after the 2008 financial crisis. Post-crisis, the composition of pay shifted away from cash toward equity. Furthermore, post-crisis pay is tied more closely to performance and less closely to factors (like firm size) that are more tenuously connected to shareholder value. We also investigate the impact of mergers and divestitures on CEO pay, overall and before and after the crisis. Finally, we consider the role that board composition plays in CEO compensation and find that CEOs take larger post-crisis pay cuts when they have more employees on their boards.

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“…9 Specifically, we use NYSE and Nasdaq regulations that require listed corporations to have a majority (more than 50%) of independent directors on their boards. As discussed in Chhaochharia and Grinstein (2009), in 9 A number of recent papers also rely on the 2003 NYSE and Nasdaq regulations (or some variant) as an instrument with which they have documented causal effects of board structure on firm value (Wintoki, 2007;Duchin et al, 2010), CEO compensation (Chhaochharia andGrinstein, 2009), credit risk (Chen, 2011) and earnings management (Chen et al, 2011). In addition, Black and Kim (2012) use Korean regulations that are analogous to the NYSE and Nasdaq exchange regulations to examine the relation between board structure and firm value in a sample of Korean firms.…”

Section: Research Design and Caveatsmentioning

confidence: 99%

Do independent directors cause improvements in firm transparency?

Armstrong¹,

Core²,

Guay³

2014

Journal of Financial Economics

369

174

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Recent research finds that firms characterized by high corporate transparency have a greater proportion of independent directors. The direction of the causality of this relation, however, is unclear. One branch of the governance literature takes corporate transparency as fixed and shows that the effective level of board independence is determined by exogenous variation in the information environment. Another branch argues that independent directors can instigate changes in transparency. We examine a regulatory shock that substantially increased board independence for some firms, and find that information asymmetry, and to some extent management disclosure and financial intermediation changed at firms affected by this shock. We also examine the lead/lag relation between changes in board structure and changes in corporate transparency, as well as whether these effects vary as a function of management entrenchment, information processing costs, and when changes to audit committee independence are required. Our results suggest that corporate transparency can be altered to suit the informational demands of a particular board structure. * Corresponding author. We appreciate the comments of an anonymous referee,

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CEO Compensation and Board Structure

Cited by 484 publications

References 49 publications

Executive pay and performance: the moderating effect of CEO power and governance structure

Executive pay and performance: the moderating effect of CEO power and governance structure

Determinants of CEO Compensation before and after the Financial Crisis

Do independent directors cause improvements in firm transparency?

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