Executive Compensation and Board Governance in US Firms

30 Pages Posted: 25 Feb 2014

See all articles by Martin J. Conyon

Martin J. Conyon

Bentley University; Wharton School, Center for Human Resources

Date Written: February 2014

Abstract

This paper investigates US executive compensation and governance. I find on average executive pay is positively correlated to firm performance and firm size. Executive pay contracts contain significant equity incentives. The use of restricted stock has become more important over time. Stock options remain an important part of executive pay. Compensation committees are generally independent and there is little evidence they result in ‘too high’ CEO pay. The Dodd‐Frank Act changed the corporate governance landscape. Firms use compensation consultants that are generally engaged by the board and not management. ‘Say‐on‐Pay’ gave shareholders a non‐binding mandatory vote on executive pay. Typically, stockholders endorse executive pay plans with very few resolutions failing.

Suggested Citation

Conyon, Martin J., Executive Compensation and Board Governance in US Firms (February 2014). The Economic Journal, Vol. 124, Issue 574, pp. F60-F89, 2014, Available at SSRN: https://ssrn.com/abstract=2400796 or http://dx.doi.org/10.1111/ecoj.12120

Martin J. Conyon (Contact Author)

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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