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http://ssrn.com/abstract=1361891
 
 

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The Bright Side of Asymmetric Benchmarking: Evidence from Top Management Team Pay


Bill B. Francis


Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Iftekhar Hasan


Fordham University; Bank of Finland

Kose John


New York University (NYU) - Department of Finance

Zenu Sharma


Long Island University

March 17, 2009


Abstract:     
CEOs and top management team members have incentives to influence their own pay. Asymmetric benchmarking of pay for CEOs has been linked to the CEO's control over the pay-setting process in previous research. This paper examines whether asymmetric benchmarking of pay exists for top management team members. The presence of asymmetric benchmarking of pay could on one hand suggest that managers are involved in skimming and on the other hand it could mean that firms insulate managers to prevent them from accessing outside opportunities. Using ExecuComp firms from 1992-2007, we find that top management team members are rewarded for good luck but they are not penalized bad luck. Unlike CEOs, asymmetric benchmarking of pay for top management team members is consistent with the retention hypothesis rather than skimming. In particular, we find that asymmetric benchmarking of pay for top management team members has a positive relationship with firm value.

Number of Pages in PDF File: 52

Keywords: CEO compensation,TMT Compensation,Benchmarking, Pay for luck

JEL Classification: D8, G3,J3

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Date posted: March 18, 2009  

Suggested Citation

Francis, Bill B. and Hasan, Iftekhar and John, Kose and Sharma, Zenu, The Bright Side of Asymmetric Benchmarking: Evidence from Top Management Team Pay (March 17, 2009). Available at SSRN: http://ssrn.com/abstract=1361891 or http://dx.doi.org/10.2139/ssrn.1361891

Contact Information

Bill B. Francis
Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )
Troy, NY 12180
United States
Iftekhar Hasan
Fordham University ( email )
113 West 60th Street
New York, NY 10023
United States
Bank of Finland ( email )
P.O. Box 160
Helsinki 00101
Finland
Kose John
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0337 (Phone)
212-995-4233 (Fax)
Zenu Sharma (Contact Author)
Long Island University ( email )
United States
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