Executive Remuneration And Firm Performance: Evidence From A Panel Of Mutual Organisations

Kevin Amess () and Leigh Drake ()

No 03/13, Discussion Papers in Economics from Department of Economics, University of Leicester

Abstract: The empirical relationship between the remuneration of: the highest paid director (HPD), mean Board remuneration (Director), and the Chairperson of the Board (Chair) and firm- level performance is examined on a panel of mutual building societies over the 1991 to 1996 period. Two measures of performance are employed: profitability and the change in total factor productivity (TFP). A strong positive relationship between profitability and pay is found for the HPD but not for the Director or Chair. The relationship between pay and TFP change is generally weak for all three measures of executive remuneration. A strong relationship between size and the executive remuneration measures is found, particularly for the Director. Although there is evidence of pay being used as a governance device, the pay-size relationship is consistent with managerial theories of the firm. Surprisingly, our results are similar to those reported for joint stock firms.

Keywords: Mutuals; executive remuneration; performance (search for similar items in EconPapers)
JEL-codes: G21 G34 D23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ifn and nep-lab
Date: 2003-09
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