CEO Compensation: Too Much is not Enough !

Laurent Weill

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: This paper conducts an analysis of the relationship between CEO compensation and managerial performance on a large panel of US public firms, by taking into account the different components of CEO compensation. We estimate a stochastic frontier model in which managerial performance is related to compensation components. We find a positive and significant influence of CEO compensation on managerial performance, with a differentiated impact for components of compensation. We show that increases in salary, bonus, and options grants tend to enhance managerial performance. Our findings tend therefore to support the view that compensation contracts can be designed to increase managerial performance.

Keywords: Executive compensation; corporate governance; stochastic frontier. (search for similar items in EconPapers)
JEL-codes: C30 G30 J33 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-eff and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2009-03

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