An Explanation of Top Executive Pay: A UK Study

Abstract

This study extena's prior research by separating executive remuneration into salary and annual bonus for the purpose of empirically verifying their determinants. A model is introduced to estimate the extent to which pay and its determinants are related. Based on a net sample of 90 large UK firms, salary was found to be strongly related to firm size, as opposed to annual bonus, which was modestly associated with both firm performance and size. An important discovery was that salary showed no relationship to a firm's economic performance. The inability to find any association between salary and performance suggests that each component of pay has a different set of determining factors. 0 Blackwell Publishers U d b n d o n School of Economics 1996. Published by Blackwell Publishers Ud, 108 Cowley Road, Oxford. OX4 IJF, and 238 Main Street, Cambridge, MA 02141. USA.Hill,C. and Phan,P. (1991). 'CEO tenure as a determinant of CEO pay'.

Association between Key Management Personnel Remuneration and the Performance of Authorized Deposit-Taking Institutions in Australia

“…Therefore, corporate performance should be positively associated with key management personnel remuneration. Although some studies of developed countries outside Australia suggested a weak pay-performance (Gregg et al, 1993;Conyon et al, 1995), Most studies taken in developed countries found a positive association between key management personnel remuneration and corporate performance (Jensen and Murphy 1990;Conyon, 1997;Coles et al, 2006;Basu et al, 2007;DeYoung et al, 2013;McKnight, 1996;Ingham and Thompson, 1995), which is consistent with the implication of agency theory.…”

An examination of executive compensation in the restaurant industry

“…The relationship between firm size and executive compensation has been widely investigated (Agarwal, 1981;Core et al, 1999;Riahi-Belkaoui, 1992), and many studies have confirmed the positive association (Carr, 1997;Carpenter and Sanders, 2002;Conyon et al, 2000;Cooley, 1979;Core et al, 1999;Elston and Goldberg, 2003;Finkelstein and Hambrick, 1989;Mangel and Singh, 1993;McKnight, 1996;Riahi-Belkaoui, 1992). Executives may prefer compensation linked to firm size rather than performance-based benefits because firm size is less unpredictable than is firm performance, and thus executive benefits are more secure (McKnight and Tomkins, 2004).…”

Family ownership, corporate governance, and top executive compensation

“…Most research on top management pay has been conducted in the US (e.g. Jensen and Murphy, 1990;Conyon and Leach, 1994;Core et al, 1999;Conyon and Murphy, 2000) and the UK (Gregg et al, 1993;Conyon et al, 1995, McKnight, 1996. Research has also been carried out in other industrialized countries including Australia (Izan et al, 1998), Canada (Zhou, 1999), Germany (Conyon and Schwalbach, 2000), Italy (Brunello et al, 2001), Japan (Kato, 1997), and Norway (Firth et al, 1996).…”