Compensation Committees and CEO Compensation Incentives in Us Entrepreneurial Firms

39 Pages Posted: 15 May 2004

See all articles by Martin J. Conyon

Martin J. Conyon

Bentley University; Wharton School, Center for Human Resources

Lerong He

State University of New York (SUNY) College at Brockport

Date Written: April 2004

Abstract

This study uses a sample of IPO firms to investigate the relation between the compensation committee, CEO compensation and CEO incentives. We investigate two theoretical models: the three-tier optimal contracting model and the managerial power model. We find support for the three-tier agency model. The presence of significant shareholders on the compensation committee (i.e., those with share stakes in excess of 5 percent) is associated with lower CEO pay and higher CEO equity incentives. Firms with higher paid compensation committee members are associated with greater CEO compensation and lower incentives. The managerial power model receives little support. We find no evidence that insiders or CEOs of other firms serving on the compensation committee raise the level of CEO pay or lower CEO incentives.

Keywords: Corporate governance, CEO compensation

Suggested Citation

Conyon, Martin J. and He, Lerong, Compensation Committees and CEO Compensation Incentives in Us Entrepreneurial Firms (April 2004). Available at SSRN: https://ssrn.com/abstract=546110 or http://dx.doi.org/10.2139/ssrn.546110

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

Lerong He

State University of New York (SUNY) College at Brockport ( email )

Brockport, NY 14420
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
620
Abstract Views
2,703
rank
48,175
PlumX Metrics