Executive Compensation in UK Property Companies

22 Pages Posted: 9 Jun 2005 Last revised: 19 Feb 2009

See all articles by Piet M. A. Eichholtz

Piet M. A. Eichholtz

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

Rogér Otten

Maastricht University - Limburg Institute of Financial Economics (LIFE)

Abstract

We study the drivers of executive compensation in the listed UK property sector. The United Kingdom provides an excellent opportunity to analyze executive compensation due to high transparency in the different components of executive compensation. We show that company size is the most important variable in explaining the level of executive compensation. We find that absolute and relative share performance significantly explains long-term compensation, that management style has a distinct influence on the level of executive compensation, and that using alternative monitoring mechanisms (institutional shareholders, debtholders, and outside directors) leads to higher levels of long-term incentives. We find only weak evidence of pay-performance sensitivity for both cash and long-term compensation. Executive shareholdings provide a much stronger link between pay and performance than does executive compensation.

Keywords: Real Estate, Agency issues, Executive compensation

JEL Classification: G34, G35, J33

Suggested Citation

Eichholtz, Piet M. A. and Kok, Nils and Otten, Rogér, Executive Compensation in UK Property Companies. Journal of Real Estate Finance and Economics, Vol. 36, No. 4, 2008. Available at SSRN: https://ssrn.com/abstract=740204 or http://dx.doi.org/10.2139/ssrn.740204

Piet M. A. Eichholtz (Contact Author)

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 3883648 (Phone)
+31 43 3258530 (Fax)

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Rogér Otten

Maastricht University - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 388 3838 (Phone)
+31 43 388 4875 (Fax)

HOME PAGE: http://www.fdewb.unimaas.nl/finance/faculty/Otten

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