The Prince and the Pauper: CEO Pay in the Us and UK

Posted: 30 Aug 2000

See all articles by Kevin J. Murphy

Kevin J. Murphy

University of Southern California - Marshall School of Business; USC Gould School of Law

Martin J. Conyon

Bentley University; Wharton School, Center for Human Resources

Date Written: Undated

Abstract

We document differences in CEO pay and incentives in the US and the UK for the fiscal year 1997. After controlling for size, sector and managerial position, CEOs in the US earn 35% higher cash compensation and 121% higher total compensation (including share options, etc.). Incentives, too, are higher in the US. The calculated effective ownership percentage (pay-performance sensitivity) in the US implies that the median CEO receives 1.32% of any increase in shareholder wealth compared to 0.25% in the UK. The differences, which are interesting given the similarity of the economies and corporate governance structures, can be largely attributed to greater share option awards in the US arising from institutional and cultural differences between the two countries.

JEL Classification: J31, J44

Suggested Citation

Murphy, Kevin J. and Conyon, Martin J., The Prince and the Pauper: CEO Pay in the Us and UK (Undated). Available at SSRN: https://ssrn.com/abstract=218497

Kevin J. Murphy (Contact Author)

University of Southern California - Marshall School of Business ( email )

BRI 308, MC 0804
Los Angeles, CA 90089-0804
United States
213-740-6553 (Phone)
213-740-6650 (Fax)

USC Gould School of Law

699 Exposition Boulevard
Los Angeles, CA 90089
United States

Martin J. Conyon

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Wharton School, Center for Human Resources ( email )

3600 Locust Walk
Philadelphia, PA 19104-6365
United States

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