Compensation Committees and CEO Compensation Incentives in U.S. Entrepreneurial Firms

Conyon, Martin and He, Lerong (2004) Compensation Committees and CEO Compensation Incentives in U.S. Entrepreneurial Firms. Journal of Management Accounting Research, 16 (1). pp. 35-56. ISSN 1049-2127

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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.

Item Type: Journal Article
Journal or Publication Title: Journal of Management Accounting Research
Uncontrolled Keywords: /dk/atira/pure/researchoutput/libraryofcongress/hf5601
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 53980
Deposited By: ep_importer_pure
Deposited On: 26 Jun 2012 09:00
Refereed?: Yes
Published?: Published
Last Modified: 01 Feb 2020 01:52

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