Modern Economy

Volume 7, Issue 12 (November 2016)

ISSN Print: 2152-7245   ISSN Online: 2152-7261

Google-based Impact Factor: 0.74  Citations  h5-index & Ranking

Determinants of CEO Compensation before and after the Financial Crisis

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DOI: 10.4236/me.2016.712133    2,058 Downloads   6,081 Views  Citations

ABSTRACT

This paper revisits the determinants of CEO compensation using recent data (covering 125 firms from 2003 to 2012). We focus in particular on how CEO pay changed after the 2008 financial crisis. Post-crisis, the composition of pay shifted away from cash toward equity. Furthermore, post-crisis pay is tied more closely to performance and less closely to factors (like firm size) that are more tenuously connected to shareholder value. We also investigate the impact of mergers and divestitures on CEO pay, overall and before and after the crisis. Finally, we consider the role that board composition plays in CEO compensation and find that CEOs take larger post-crisis pay cuts when they have more employees on their boards.

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Sonenshine, R. , Larson, N. and Cauvel, M. (2016) Determinants of CEO Compensation before and after the Financial Crisis. Modern Economy, 7, 1455-1477. doi: 10.4236/me.2016.712133.

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