CEO compensation and operational risk

Khalid Al-Amri

International Journal of Business Innovation and Research, 2017, vol. 12, issue 4, 407-424

Abstract: This study examines the impact of operational risk on CEO compensation in the property-liability insurance industry. We find that property-liability CEOs are not penalised for operational risk in terms of cash-based compensation, while they are penalised in terms of their option-based compensation. Our findings also suggest that CEOs are largely insulated from firm level operational losses in terms of their total compensation. These findings have implications for implementing optimal risk-based contracting decisions for CEO compensation contracts.

Keywords: corporate governance; CEO compensation; operational risk; insurance industry; executive compensation; cash-based compensation; options-based compensation. (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbire:v:12:y:2017:i:4:p:407-424

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