We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
THE INFLUENCE OF COMPENSATION COMMITTEE FINANCIAL EXPERTISE ON CEO PAY.
- Authors
Amoah, Nana Y.; Asante, Afua; Lamptey, Ebenezer K.; Makkawi, Bilal
- Abstract
Using a sample of 11,889 observations from 2007 to 2016, we examine whether compensation committee financial expertise is associated with CEO pay. We find a negative relation between compensation committee financial expertise and total CEO pay. Other results that emerge from this study are a negative relation between compensation committee financial expertise and proportion of CEO equity compensation and a positive relation between compensation committee financial expertise and proportion of CEO cash compensation. Our findings imply that financial expertise on the compensation committee appears to increase monitoring effectiveness of the compensation committee by curbing excessive CEO pay. As to the impact of compensation committee financial expertise on CEO pay structure, our results suggest that financial expertise on the compensation committee makes the compensation committee more conservative regarding risk taking by the CEO which is reflected in a lower proportion of CEO equity compensation and a higher proportion of CEO cash compensation. Our results are consistent with Reiter (2004) who argues that the monitoring role of the compensation committee is enhanced by the knowledge and experience of compensation committee members. Finally, the present study provides insight into the role of compensation committee financial expertise in limiting risk-taking by the CEO and constraining excessive CEO pay.
- Subjects
EXECUTIVE compensation; AUDIT committees; WAGE payment systems; EXPERTISE
- Publication
Journal of Business & Behavioral Sciences, 2022, Vol 34, Issue 1, p4
- ISSN
1099-5374
- Publication type
Article