Ownership Contingent Influence Of Governance Structure On Ceo Compensation

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Ownership Contingent Influence of Governance Structure on CEO Compensation

Author : Bala N. Balasubramanian
Publisher :
ISBN 13 :
Total Pages : 24 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Ownership Contingent Influence of Governance Structure on CEO Compensation by : Bala N. Balasubramanian

Download or read book Ownership Contingent Influence of Governance Structure on CEO Compensation written by Bala N. Balasubramanian and published by . This book was released on 2017 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study examines the need for changes in the standard governance structure through investigation of the moderating effect of ownership identity and ownership concentration on the influence of standard governance structure on CEO compensation in companies with dominant owners in control.Using data from companies listed on the National Stock Exchange (NSE) of India that were a part of the diversified 100 stock index for the period 2007-2012, we find that the influence of standard governance structure on CEO compensation is indeed contingent on identity of the owner and concentration of ownership. Duality is the only governance measure that directly influences CEO compensation in family owned domestic private companies. Gender diversity and proportion of non-executive independent directors directly influence CEO compensation in corporate owned foreign private companies. The direction of influence of non-executive independent directors however supports the possibility of board capture by CEOs. In case of government companies, none of the governance measures directly influences CEO compensation. The key finding of the study are the meagre and in one instance an inappropriate (from governance point of view) influence of standard governance measures. As the decision on CEO compensation in case of companies with dominant owners in de facto control of board and executive management implies 'principal-principal' rather than 'principal-agent' conflict of interest, the results from the study suggest a re-think on the standard governance framework that is designed to deal with the latter conflict. A 2013 legislative initiative disenfranchising interested shareholders from voting on related party transactions including CEO compensation is a step in the right direction but much else remains to be done.Corporate governance frameworks across the world are derived from the frameworks proposed in the US and UK context of dispersed ownership. The framework is designed to deal essentially with 'principal-agent' conflict of interest. This 'one size fits all' approach may not ensure governance effectiveness in several situations that arise in functioning of organizations that require dealing with 'principal-principal' conflict. Our study on CEO compensation in the Indian context underlines the need for governance based on minority-shareholder-centered governance framework.

The Impact of Ownership Structure on Chief Executive Compensation

Author : Elten Nkonyam Ndifon
Publisher : LAP Lambert Academic Publishing
ISBN 13 : 9783845419107
Total Pages : 60 pages
Book Rating : 4.4/5 (191 download)

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Book Synopsis The Impact of Ownership Structure on Chief Executive Compensation by : Elten Nkonyam Ndifon

Download or read book The Impact of Ownership Structure on Chief Executive Compensation written by Elten Nkonyam Ndifon and published by LAP Lambert Academic Publishing. This book was released on 2012 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: This piece of work examines the relationship between ownership structure via the separation of cash flow and voting right and its impact on executive compensation in Swedish list companies. It is important to note that little empirical research has been done on this issue concerning Sweden and the Nordic region in general. A cross sectional anaysis of data on the various variables were used to obtain important result and adding more literature to the Corporate Governance System used in the scandinavia and Sweden in particular. This writing brings into light works of other authors and how their findings relate to each other and more importantly how our work converges and/or diverges from theirs. A rational of a good CEO pay scheme is also outlined and the different schools of thoughts to explain their views on CEO pay and ownership structure of a firm. This work also examines the devices used by Swedish listed firms in order to separate ownership from control. It would be very interesting to navigate this material to find out what these devices are, what they have in common and how they affect CEO pay.

How Ownership and Corporate Governance Influence Chief Executive Pay in China's Listed Firms

Author : Michael Firth
Publisher :
ISBN 13 :
Total Pages : 33 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis How Ownership and Corporate Governance Influence Chief Executive Pay in China's Listed Firms by : Michael Firth

Download or read book How Ownership and Corporate Governance Influence Chief Executive Pay in China's Listed Firms written by Michael Firth and published by . This book was released on 2007 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article contributes to the international corporate governance literature by examining factors that affect CEO compensation in China. The article models of CEO pay based on an understanding of the unique economic and structural reforms undertaken by the privatized State Owned Enterprises. The findings show that CEO compensation depends, in part, on the firm's operating profits and this indicates that incentive systems are being used to motivate top managers. Corporate governance factors have a significant impact on CEO compensation, but they do so in ways that differ from those in other countries. Our conclusions are robust across different formulations of the basic model and they have public policy implications for China and other transitional economies that are moving away from state ownership of business enterprises.

Executive Directors' Pay, Networks and Operating Performance

Author : Rafel Crespí-Cladera
Publisher :
ISBN 13 :
Total Pages : 58 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Executive Directors' Pay, Networks and Operating Performance by : Rafel Crespí-Cladera

Download or read book Executive Directors' Pay, Networks and Operating Performance written by Rafel Crespí-Cladera and published by . This book was released on 2015 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how ownership structure affects the director networking-compensation relationship. Furthermore, we measure the subsequent impact of this relationship on future operating performance of firms. As in previous research, our study also finds empirical evidence suggesting that higher network activity of executive directors conveys to larger compensation figures. Our data set of Spanish listed companies, with high average ownership concentration, show that this compensation is higher for firms with dispersed ownership than for firms with concentrated ownership. Also, the relationship of overcompensation with future operating performance is contingent on the ownership structure.The implications for executive directors are that networking leads to higher compensation. For dispersed ownership firms, the consequence is that promoting executive networking could be harmful unless other corporate governance mechanisms prevent this outcome. For concentrated ownership firms, this structure allows to capture increases in operating performance. Finally, policy recommendations on corporate governance regulation are that self-regulation is better than imposing the same limit on the number of directorships to all firms if an effective control mechanism operates. Our results suggest that the presence of controlling owners is a strong corporate governance mechanism.

Ownership Structure and CEO Compensation in North America

Author : Yusuf Nulla
Publisher :
ISBN 13 :
Total Pages : 11 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Ownership Structure and CEO Compensation in North America by : Yusuf Nulla

Download or read book Ownership Structure and CEO Compensation in North America written by Yusuf Nulla and published by . This book was released on 2014 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt: This research had investigated ownership structure and its impact on CEO compensation system in TSX/S&P and NYSE indexes companies from the period 2005 to 2010. The totaled of two hundred and forty companies were selected through random sample method. The research question for this study was: is there a relationship between CEO compensation, firm size, accounting firm performance, and corporate governance, among owner-managed and management-controlled companies? To answer this question, thirty six statistical models were created. It was found that, there was a relationship between CEO compensation, firm size, accounting performance, and corporate governance, both in the owner-managed and management-controlled companies, except for the relationship between CEO bonus and firm size of owner-managed companies.

Pay Without Performance

Author : Lucian A. Bebchuk
Publisher : Harvard University Press
ISBN 13 : 9780674020634
Total Pages : 308 pages
Book Rating : 4.0/5 (26 download)

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Book Synopsis Pay Without Performance by : Lucian A. Bebchuk

Download or read book Pay Without Performance written by Lucian A. Bebchuk and published by Harvard University Press. This book was released on 2004 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.

Influence of Board Diversity and Characteristics on CEO Compensation

Author : Bala N. Balasubramanian
Publisher :
ISBN 13 :
Total Pages : 32 pages
Book Rating : 4.:/5 (21 download)

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Book Synopsis Influence of Board Diversity and Characteristics on CEO Compensation by : Bala N. Balasubramanian

Download or read book Influence of Board Diversity and Characteristics on CEO Compensation written by Bala N. Balasubramanian and published by . This book was released on 2015 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Governance Structure and the Weighting of Performance Measures in CEO Compensation

Author : Tony Davila
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Governance Structure and the Weighting of Performance Measures in CEO Compensation by : Tony Davila

Download or read book Governance Structure and the Weighting of Performance Measures in CEO Compensation written by Tony Davila and published by . This book was released on 2007 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: We empirically examine how governance structure affects the design of executive compensation contracts and, in particular, the implicit weights of firm performance measures in CEO compensation. We find that compensation contracts in firms with higher takeover protection and where the CEO has more influence on governance decisions put more weight on accounting-based measures of performance (return on assets) than on stock-based performance measures (market returns). In additional tests, we further find that CEO compensation in these firms has lower variance and a higher proportion of cash (versus stock-based) compensation. We further find that CEOs' incentives (measured as changes in CEO annual wealth, which includes changes in the value of CEOs' equity holdings, in addition to yearly compensation) do not vary across governance structures. These findings are consistent with CEOs in firms with high takeover protection and high CEO influence on governance being able to influence the contracting.

Other People's Money

Author : Steve Werner
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.E/5 ( download)

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Book Synopsis Other People's Money by : Steve Werner

Download or read book Other People's Money written by Steve Werner and published by . This book was released on 1994 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Role and Effect of Corporate Governance and Remuneration Consultants on CEO Compensation

Author : Saleh Ali F. Alagla
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (798 download)

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Book Synopsis The Role and Effect of Corporate Governance and Remuneration Consultants on CEO Compensation by : Saleh Ali F. Alagla

Download or read book The Role and Effect of Corporate Governance and Remuneration Consultants on CEO Compensation written by Saleh Ali F. Alagla and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates the role and effect of different aspects of corporate governance, ownership structure and remuneration consultants on determining the level and the structure of CEO compensation. The main objective of this research is to better understand the impact of these aspects on compensation of Chief Executive Officers (CEOs) in UK firms. Two models are constructed and a set of hypotheses is developed. These models are tested using a sample consisting of the top 350 companies listed on the London Stock Exchange. Firms in the financial, investment and insurance industries are excluded due to the different nature of their accounting, governance, and compensation practices. The study covers the period of five financial years (2004-2008). Twenty-two hypotheses are derived from both models. These hypotheses are tested using multivariate techniques in order to determine to what extent corporate governance, ownership and remuneration consultants' attributes play a role in monitoring managers and setting appropriate CEO compensation. Using a sample of 237 non-financial FTSE 350 firms during 2004-2008 (i.e. 851 firm-year observations), and after controlling for the standard economic and human capital determinants of compensation, this study finds that corporate governance, ownership and remuneration consultants' characteristics play an important role in determining CEO compensation. However, the findings do not suggest that these attributes always play a positive role in constraining opportunistic managerial behaviour. Surprisingly, some of the governance attributes have been found to facilitate the executives' needs rather than to attempt to monitor them. The findings of the thesis suggest that a number of theoretical perspectives can be used to explain the relationship between corporate governance, remuneration consultants and CEO compensation in the UK firms. For example, while the findings of board independence and CEO duality provide strong support to the stewardship theory, as firms enjoy better compensation governance when their boards contain more executive directors and are chaired by CEOs, the results of chairman independence and ownership, and remuneration committee independence, are found to be in line with both agency theory and the alignment of interests' hypothesis of agency theory since we find these variables play a strong role in mitigating the agency problems and agency costs through setting appropriate CEO compensation. Conversely, the managerial power perspective receives great support from the findings of a number of governance, ownership, and consultants' variables. That is, the analysis concludes that larger boards, well-compensated board and remuneration committee non-executive directors, CEOs with greater share ownership, CEOs sitting on the remuneration committee, less independent remuneration consultants, and the switch of remuneration consultants all play significant roles in increasing the level of CEO compensation and setting inappropriate designs for remuneration that are more favourable to the CEO (i.e. more fixed and less equity-based compensation). Overall, the findings of this thesis imply that shareholders, regulators, and practitioners should be concerned about the composition and the characteristics of a firm's board of directors, remuneration committee, and external directors who comprise the firm's internal control structure as this research finds that the quality of corporate and compensation governance varies depending on board and remuneration committee size and characteristics. Furthermore, it is advised that the relevant parties should pay attention to the remuneration consultants' independence status and characteristics since this study finds that independent, specialized, and larger remuneration consultants play a significant role in enhancing the quality of compensation arrangements. Therefore, this study offers new insights over the effect that corporate governance and remuneration consultants can exert over the design of CEO compensation contracts.

Corporate Governance, CEO Compensation and Firm Performance

Author : John E. Core
Publisher :
ISBN 13 :
Total Pages : 70 pages
Book Rating : 4.F/5 ( download)

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Book Synopsis Corporate Governance, CEO Compensation and Firm Performance by : John E. Core

Download or read book Corporate Governance, CEO Compensation and Firm Performance written by John E. Core and published by . This book was released on 1997 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Executive Compensation, Capital Structure, Payouts and Cash Holdings

Author : Adilah Azhari
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (141 download)

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Book Synopsis Executive Compensation, Capital Structure, Payouts and Cash Holdings by : Adilah Azhari

Download or read book Executive Compensation, Capital Structure, Payouts and Cash Holdings written by Adilah Azhari and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this research is to examine the relationship between CEO pay and firm's financial policies. According to agency theory, manager-shareholder conflicts of interest can be alleviated (and managerial compensation can be influenced) by debt. Debt lowers the level of free cash flow which managers are able to obtain because monitoring increases. This means that when the risk of bankruptcy appears, managers must consider the best financial interests of shareholders. Under agency theory, pay-performance sensitivity is smaller for high-debt companies when alternatives are available for high alignment incentives and high debt. The research objectives focus on three empirical chapters to explore the association between CEO pay and firm's financial policies for UK firms. The first study investigates the relationship between pay-performance sensitivity and debt as the explanatory variables. In the second study, the link between CEO compensation and corporate payout policy by segregating between total payouts, dividends and share repurchases are explored. Finally, the last objective examines the interaction between CEO pay packages and cash holdings of the firm. The research sample consists of 183 publicly traded companies listed on the FTSE 350 from 1999 to 2008. The estimates in the pay-performance study show mixed support for pay-performance and leverage because the negative coefficients for market debt have weak significance overall when median regressions are employed. Thus, it can be concluded that a firm's leverage has little effect on pay-performance sensitivity as a mechanism to align the interests of the firm's CEO and debt holders. However, there is strong support for the hypothesis that CEO pay-performance sensitivity increases with a firm's growth opportunities, which suggests that firms award higher equity compensation to attract managers with more talent. The second study in this research investigates how corporate payout policy is influenced by CEO share ownership, CEO stock options and CEO long-term incentive plans (LTIPs) in UK firms from 1999 to 2008 using Tobit regressions (for total payouts, dividends and share repurchases) and logistic regressions for the propensity of firms paying out to shareholders. The results show that CEO share ownership LTIPs have positive effects on corporate payout policy. In contrast, corporate governance characteristics do not show conclusive results which affect changes in payout policy. Dividend payout is significantly influenced by CEO share ownership compared to share repurchase payout. The findings support the notion that CEOs' share equity ownership is used to align managerial interest with shareholders in terms of cash payouts to shareholders. In the final empirical chapter, the study focuses on the effect of CEO pay and corporate governance on cash holdings. The study investigates the determinants of cash holdings based on free cash flow and the agency model using cash ratios (cash to sales, cash to assets, cash to market value and log of cash) as dependent variables. The analysis documents that CEO ownership and log LTIPs both have positive and strong relationships with cash ratios. The results support the hypothesis that equity compensation can be used to align managers' interests with those of shareholders.

Executive Pay and Performance

Author : Collins G. Ntim
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Executive Pay and Performance by : Collins G. Ntim

Download or read book Executive Pay and Performance written by Collins G. Ntim and published by . This book was released on 2016 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the crucial question of whether chief executive officer (CEO) power and corporate governance (CG) structure can moderate the pay-for-performance sensitivity (PPS) using a large up-to-date South African dataset. Our findings are three-fold. First, when direct links between executive pay and performance are examined, we find a positive, but relatively small PPS. Second, our results show that in a context of concentrated ownership and weak board structures; the second-tier agency conflict (director monitoring power and opportunism) is stronger than the first-tier agency problem (CEO power and self-interest). Third, additional analysis suggests that CEO power and CG structure have a moderating effect on the PPS. Specifically, we find that the PPS is higher in firms with more reputable, founding and shareholding CEOs, higher ownership by directors and institutions, and independent nomination and remuneration committees, but lower in firms with larger boards, more powerful, and long-tenured CEOs. Overall, our evidence sheds new important theoretical and empirical insights on explaining the PPS with specific focus on the predictions of the optimal contracting and managerial power hypotheses. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, pay, and performance proxies.

The Impact of Mandated Disclosure on Performance-Based CEO Compensation

Author : Jane Craighead
Publisher :
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Impact of Mandated Disclosure on Performance-Based CEO Compensation by : Jane Craighead

Download or read book The Impact of Mandated Disclosure on Performance-Based CEO Compensation written by Jane Craighead and published by . This book was released on 2004 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulators argue that mandated compensation disclosure improves corporate governance by permitting shareholders to enjoin boards of directors to reward executives in ways that are consistent with shareholder value creation. We posit that mandated compensation disclosure, or the absence thereof, has a greater impact on the CEO compensation practices of widely held firms than of closely held firms. More specifically, we expect that, in the absence of mandated disclosure, CEO compensation is likely to be less performance-contingent among widely held firms than among closely held firms. Moreover, we also expect that the advent of mandated disclosure leads widely held firms to increase the extent to which CEO compensation is performance-contingent, much more so than closely held firms would. We use a unique database resulting from the Ontario Securities Commission amendment of Regulation 638 in October 1993. For the first time, this amendment required firms listed on the Toronto Stock Exchange to provide detailed executive compensation data similar to that required by the SEC, for current year as well as retroactively for the previous two years. We find that, in the absence of mandated disclosure, CEO cash compensation in widely held firms is less performance-contingent than in closely held firms. With the imposition of mandated disclosure, performance-contingent cash compensation increases more in widely held firms than in closely held firms. Results with respect to stock option grants are mixed, with both closely held and widely held firms reacting to the advent of mandated disclosure.

The Handbook of the Economics of Corporate Governance

Author : Benjamin Hermalin
Publisher : Elsevier
ISBN 13 : 0444635408
Total Pages : 762 pages
Book Rating : 4.4/5 (446 download)

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Book Synopsis The Handbook of the Economics of Corporate Governance by : Benjamin Hermalin

Download or read book The Handbook of the Economics of Corporate Governance written by Benjamin Hermalin and published by Elsevier. This book was released on 2017-09-18 with total page 762 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. - Concentrates on underlying principles that change little, even as the empirical literature moves on - Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces - Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field's substantive findings, all of which help point the way forward

Directors' Remuneration

Author : Study Group on Directors' Remuneration
Publisher :
ISBN 13 :
Total Pages : 82 pages
Book Rating : 4.F/5 ( download)

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Book Synopsis Directors' Remuneration by : Study Group on Directors' Remuneration

Download or read book Directors' Remuneration written by Study Group on Directors' Remuneration and published by . This book was released on 1995 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: A complete copy of the Report including the Code of Best Practice. The Study Group on Director's Remuneration was set up on the initiative of the CBI in January 1995 in response to public and shareholder concerns about pay and other remuneration of company directors in the United Kingdom. The report covers code of best practice, main action points, remuneration committees, disclosure, remuneration policy, service contracts and compensation, privatised utilities.

Executive Compensation Structure and Corporate Governance Choices

Author : Keith D. Harvey
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Executive Compensation Structure and Corporate Governance Choices by : Keith D. Harvey

Download or read book Executive Compensation Structure and Corporate Governance Choices written by Keith D. Harvey and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data that reflect the significant growth in incentive compensation during the last decade, we extend research in this area by specifying a more complete model that addresses both corporate governance and risk sharing factors that theory suggests should influence compensation policy. We find that the extent of incentive compensation is systematically related to other features of corporate governance, as well as to factors affecting managerial risk-aversion. The results support the following conclusions: a) the presence of outside directors and blockholders facilitates the use of incentive compensation; b) incentive compensation is inversely related to use of leverage; and c) the component of compensation that is incentive pay is lower for CEOs near or at retirement age and is decreasing in the percentage of firm stock already owned by the CEO.