Benchmarking of pay components in CEO compensation design

Yaniv Grinstein, Beni Lauterbach and Revital Yosef

Journal of Corporate Finance, 2022, vol. 77, issue C

Abstract: We document an important element of CEO compensation design – benchmarking of the pay components. Analyzing a panel of CEO compensation data entailing 1451 S&P 1500 firms during 2006–2019, we find that: 1) Component-of-pay benchmarking more effectively explains CEO compensation design than does total compensation benchmarking; 2) Most pay components exhibit similar benchmarking behavior; the only exception is the milder adjustment of salary to that of peers; 3) Benchmarking of the weight of each component in total compensation is also apparent. Our results suggest that benchmarking of pay components is an economically fundamental part of CEO compensation design.

Keywords: Benchmarking; CEO compensation; Peer group; Pay mix; Pay components (search for similar items in EconPapers)
JEL-codes: G34 G38 J31 J33 M12 M52 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:77:y:2022:i:c:s0929119922001511

DOI: 10.1016/j.jcorpfin.2022.102308

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