Board Structure and Executive Pay: Evidence from the UK
نویسنده
چکیده
We examine the impact of board structure on executive pay for 1,880 UK public firms over 1983-2002, using panel data analysis. Firstly, the proportion of non-executive directors tends to decrease the rate of increase in executive pay whilst board size tends to increase it. Secondly, the proportion of non-executives strengthens the relation between the rate of increase in executive pay and changes in performance. In particular, although for firms in general the pay-performance link is much weaker when performance is poor, a higher proportion of non-executives strengthens this link considerably. Finally, firms that increase the number of non-executives in order to comply with the Cadbury Code of 1992, experience both a decline in the rate of increase in executive pay and an increase in pay-performance sensitivity. JEL classification: G32, G34
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