On the Compensation and Activity of Corporate Boards
Posted: 14 Apr 2017
Date Written: December 11, 2014
Within the nexus of contracts that makes up the firm, relatively little is known about the relationship between firms and their directors. Using a unique dataset comprising director compensation and activity, I find that firms use meeting fees and equity-based compensation as substitutes. In addition, paying directors for attending board/committee meetings is associated with more active boards and more active monitoring and advising committees. In contrast, a higher proportion of equity-based compensation is positively associated with monitoring activity but negatively associated with advising activity. Furthermore, more active boards and committees are paid more. Finally, I find that the variation in director compensation and activity generally reflects trade-offs between the costs and benefits of director effort, consistent with prior work.
Keywords: Corporate Boards; Director Compensation; Director Activity; Contracting; Committee Meetings
JEL Classification: G30; G34
Suggested Citation: Suggested Citation