Determinants of Executive Board Remuneration. New Insights from Germany

Corporate Ownership & Control 11 (2014), 96-113.

18 Pages Posted: 10 Nov 2014 Last revised: 14 Oct 2017

See all articles by Marc Eulerich

Marc Eulerich

University of Duisburg-Essen, Mercator School of Management

Patrick Velte

Leuphana University of Lueneburg

Date Written: March 14, 2014

Abstract

Board remuneration in German listed companies becomes more and more subject of public and political discussion, concerning the presumed lack of transparency and too short-term orientation. Besides the increasing regulatory activity, the arrangement of board compensation constitutes a focal economic issue of current empirical corporate governance research. The purpose of our analysis is to identify factors determining the amount and the structure of board compensation in Germany. Our study of 128 German listed companies for the business year 2011 investigates the impact of company-, performance and corporate governance-related factors on board remuneration by means of a multivariate-regression analysis. The analysis indicates that company size has a positive impact and leverage a negative on management board compensation. Furthermore, ROE and return on total capital, as indicators for performance-related variables, both have a positive impact on the average level of management remuneration. However, the corporate governance-related characteristics as ownership concentration and size of the supervisory board have no significant impact on management board remuneration.

Keywords: Corporate Governance, Executive Board Remuneration, Firm Performance, Agency Theory, Financial Incentives, Ownership Concentration, Supervisory board

JEL Classification: G34

Suggested Citation

Eulerich, Marc and Velte, Patrick, Determinants of Executive Board Remuneration. New Insights from Germany (March 14, 2014). Corporate Ownership & Control 11 (2014), 96-113.. Available at SSRN: https://ssrn.com/abstract=2521023

Marc Eulerich (Contact Author)

University of Duisburg-Essen, Mercator School of Management ( email )

Lotharstrasse 65
Duisburg, 47057
Germany
00492033792600 (Phone)

HOME PAGE: http://www.msm.uni-due.de/ircg

Patrick Velte

Leuphana University of Lueneburg ( email )

Scharnhorststraße 1
Lüneburg, 21335
Germany

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