CEO Compensation and Board Oversight
نویسندگان
چکیده
In response to the corporate scandals in 2001-2002, the major U.S. exchanges came up with new regulations which are intended to enhance board oversight. We use this regulation event to shed light on the effect of board oversight on CEO compensation. We find that firms that were not complying with these regulations decreased their CEO compensation by between 20%-25% upon compliance, compared to firms that were already complying with these regulations. The significant decrease in compensation is due to a decrease in the option-based portion of the compensation. The results suggest that board oversight is a significant determinant of the size and structure of CEO compensation.
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