Do Directors Perform for Pay?

Renee Adams and Daniel Ferreira

No 2005-2, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: Many corporations reward their outside directors with a modest fee for each board meeting they attend. Using two non-overlapping data sets on director attendance behavior, we provide robust evidence that directors are less likely to have attendance problems at board meetings when board meeting fees are higher. This is suprising since meeting fees, on average roughly $1,200, represent an arguably small fraction of the total wealth of a representative director in our samples. Thus, corporate directors appear to perform for even very small financial rewards. We also find that firms that do not pay meeting fees appear to pay each of their directors approximately $40,000 more than firms that pay meeting fees. This suggests that firms that ignore meeting fees as an incentive device have a tendency to overpay their directors.

Keywords: Directors; Executive Compensation; Incentives; Attendance; Board Meetings (search for similar items in EconPapers)
JEL-codes: G34 J41 M52 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2005-09
Note: This Version: April 6, 2004
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/13504/wp2005-2a.pdf

Related works:
Journal Article: Do directors perform for pay? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2005-2

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