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CEO Presence on the Compensation Committee: A Puzzle

Author

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  • Boyle, Glenn
  • Roberts, Helen
Abstract
Conventional wisdom suggests that CEO membership of the compensation committee is an open invitation to rent extraction by self-serving executives. However using data from New Zealand - where CEO compensation committee membership is relatively common - we find that annual pay increments for CEOs with this apparent advantage averaged six percentage points less than those enjoyed by other CEOs during the 1997-2005 period. After controlling for variation in firm performance the difference is a still-sizeable four percentage points. This puzzling result cannot be explained by risk-return tradeoff considerations interaction with other governance variables selection bias or variable mis-measurement.

Suggested Citation

  • Boyle, Glenn & Roberts, Helen, 2012. "CEO Presence on the Compensation Committee: A Puzzle," Working Paper Series 19222, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:19222
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/19222
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    References listed on IDEAS

    as
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