50 Pages Posted: 12 Feb 2009 Last revised: 19 Jun 2012
Date Written: May 22, 2012
This paper challenges the widely accepted stylized fact that CEOs in the United States are paid significantly more than their foreign counterparts. Using CEO pay data across 14 countries with mandated pay disclosures, we show that the US pay premium is economically modest and primarily reflects the performance-based pay demanded by institutional shareholders and independent boards. Indeed, we find no significant difference in either level of CEO pay or the use of equity-based pay between US and non-US firms exposed to international and US capital, product, and labor markets. We also show that US and non-US CEO pay has largely converged in the 2000s. The findings are robust to alternative methods for adjusting the risk of equity-based pay.
Keywords: Executive compensation, CEO pay, International pay differences, Stock options, Corporate governance
JEL Classification: G32, G34, G38
Suggested Citation: Suggested Citation
Fernandes, Nuno and Ferreira, Miguel A. and Matos, Pedro P. and Murphy, Kevin J., Are US CEOs Paid More? New International Evidence (May 22, 2012). EFA 2009 Bergen Meetings Paper; ECGI - Finance Working Paper No. 255/2009; AFA 2011 Denver Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1341639 or http://dx.doi.org/10.2139/ssrn.1341639
By Kevin Murphy