Are US CEOs Paid More? New International Evidence
Miguel A. Ferreira
Nova School of Business and Economics; European Corporate Governance Institute (ECGI)
Pedro P. Matos
University of Virginia - Darden School of Business; European Corporate Governance Institute (ECGI)
Kevin J. Murphy
University of Southern California - Marshall School of Business; University of Southern California - Department of Economics; USC Gould School of Law
September 30, 2012
Review of Financial Studies, Forthcoming
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.
Number of Pages in PDF File: 66
Keywords: executive compensation, CEO pay, international pay differences, stock options, corporate governance
JEL Classification: G32, G34, G38
Date posted: October 10, 2012 ; Last revised: November 27, 2012
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