The Prince and the Pauper: CEO Pay in the Us and UK
Posted: 30 Aug 2000
Date Written: Undated
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: Suggested Citation