Compensation consultants and CEO pay: UK evidence

Corporate Governance: An International Review

Volumn 18, Issue 6, 2010, Pages 511-526

  Voulgaris, Georgios ^a   Stathopoulos, Konstantinos ^a   Walker, Martin ^a  

^a UNIVERSITY OF MANCHESTER   (United Kingdom)

Author keywords

Compensation Consultants; Corporate Governance; Executive Compensation

Indexed keywords

EID: 78049425263     PISSN: 09648410     EISSN: 14678683     Source Type: Journal    
DOI: 10.1111/j.1467-8683.2010.00822.x     Document Type: Article

References (55)

1. Abbott, L. J., Parker, S., Peters, G. F., & Raghunandan, K. 2003. An empirical investigation of audit fees, nonaudit fees, and audit committees. Contemporary Accounting Research, 20: 215-234.
2. Aggarwal, A. & Samwick, A. 1999. The other side of the trade-off: The impact of risk on executive compensation. Journal of Political Economy, 107: 65-105.
3. Armstrong, C., Ittner, C., & Larcker, D. 2009. Economic characteristics, corporate governance, and the influence of compensation consultants on executive pay levels. Working Paper.
4. Baker, G. M., Jensen, M., & Murphy, K. J. 1988. Compensation and incentives: Practice vs. theory. Journal of Finance, 43: 593-616.
5. Bauwhede, H. V. & Wilekens, M. 2008. Disclosure on corporate governance in the European Union. Corporate Governance: An International Review, 16: 101-115.
6. Bebchuk, L. & Fried, J. 2010. How to tie equity compensation to long-term results. Journal of Applied Corporate Finance, 22: 99-106.
7. Bebchuk, L., Fried, J., & Walker, D. 2002. Managerial power and rent extraction in the design of executive compensation. University of Chicago Law Review, 69: 751-846.
8. Bernille, G. & Jarrell, G. 2009. The impact of the options backdating scandal on shareholders. Journal of Accounting and Economics, 47: 2-26.
9. Bizjak, J., Lemmon, M. L., & Naveen, L. 2007. Does the use of peer groups contribute to higher pay and less efficient compensation? Journal of Financial Economics, 90: 152-168.
10. Black, F. & Scholes, M. 1973. The pricing of options and corporate liabilities. Journal of Political Economy, 81: 637-654.
11. Boyd, B. K. 1994. Board control and CEO compensation. Strategic Management Journal, 15: 335-344.
12. Bush, T. 2005. "Divided by common language, "Where economics meets the law: US versus non-US financial reporting models. London: The Institute of Chartered Accountants in England and Wales.
13. Cadman, B. D., Carter, M. E., & Hillegeist, S. A. 2010. The incentives of compensation consultants and CEO pay. Journal of Accounting and Economics, 49: 263-280.
14. Carcello, J. V. & Neal, T. L. 2000. Audit committee composition and auditing reporting. The Accounting Review, 70: 453-467.
15. Conyon, M. & Murphy, K. J. 2000. The prince and the pauper? CEO pay in the United States and United Kingdom. The Economic Journal, 110: 640-671.
16. Conyon, M. & Peck, S. 1998. Board control, remuneration committees, and top management compensation. Academy of Management Journal, 41: 146-157.
17. Conyon, M., Peck, S., Read, L., & Sadler, G. 2000. The structure of executive compensation contracts: UK evidence. Long Range Planning, 33: 478-503.
18. Conyon, M., Peck, S., Read, L., & Sadler, G. 2009a. Compensation consultants and executive pay: Evidence from the United States and the United Kingdom. Academy of Management Pespectives, 23: 43-55.
19. Conyon, M., Peck, S., Read, L., & Sadler, G. 2009b. New perspectives on the governance of executive compensation: Examining the role and effect of compensation consultants. Journal of Management and Governance, forthcoming.
20. Core, J. E. & Guay, W. R. 1999. The use of equity grants to manage optimal equity incentive levels. Journal of Accounting and Economics, 28: 151-184.
21. Fama, E. F. & Jensen, M. C. 1983. Separation of ownership and control. Journal of Law and Economics, 26: 301-325.
22. Financial Reporting Council. 1998. The combined code on corporate governance. London: Financial Reporting Council.
23. Financial Reporting Council. 2003. The combined code on corporate governance. London: Financial Reporting Council.
24. Finkelstein, S. & Hambrick, D. C. 1989. Chief executive compensation: A study of the interesections of market and political processes. Strategic Management Journal, 10: 121-134.
25. Fredrickson, J. W., Hambrick, D. C., & Baumrin, S. 1988. A model of CEO dismissal. The Academy of Management Review, 13: 255-270.
26. Grinstein, Y. & Hribar, P. 2004. CEO compensation and incentives: Evidence from M&A bonuses. Journal of Financial Economics, 73: 119-143.
27. Hall, B. & Murphy, J. 2002. Stock options for undiversified executives. Journal of Accounting and Economics, 33: 3-42.
28. Hanlon, M., Rajgopal, S., & Shevlin, T. 2003. Are executive stock options associated with future earnings? Journal of Accounting and Economics, 36: 3-43.
29. Harris, M. & Raviv, A. 1979. Optimal incentive contracts with imperfect information. Journal of Economic Theory, 20: 231-259.
30. Hartzell, J. & Starks, L. 2003. Institutional investors and executive compensation. Journal of Finance, 58: 2351-2374.
31. Heckman, J. J. 1979. Sample selection bias as a specification error. Econometrica, 47: 153-161.
32. Heckman, J. J. & Uzua, S. 2010. Comparing IV with structural models: What simple IV can and cannot identify. Journal of Econometrics, 156: 27-37.
33. Jensen, M. C. 1986. Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76: 323-329.
34. Jensen, M. C. & Murphy, K. J. 1990. Performance pay and top-management incentives. Journal of Political Economy, 98: 225-264.
35. John, T. & John, K. 1993. Top management compensation and capital structure. Journal of Finance, 48: 949-974.
36. Lambert, R. A. 1983. Long-term contracts and moral hazard. The Bell Journal of Economics, 14: 441-452.
37. Lambert, R. A. & Larcker, D. F. 1987. An analysis of the use of accounting and market measures of performance in executive compensation contracts. Journal of Accounting Research, 25: 85-125.
38. Lang, L. H. & Stulz, R. M. 1992. Contagion and competitive intra-industry effects of bankruptcy announcements: An empirical analysis. Journal of Financial Economics, 32: 45-60.
39. Lee, L. F. 1978. Unionism and wage rates: A simultaneous equation model with qualitative and limited dependent variables. International Economic Review, 19: 415-433.
40. Maddala, G. S. 1986. Limited - Dependent and qualitative variables in econometrics. Cambridge: Cambridge University Press.
41. Main, B. G., O'Reilly, C., & Wade, J. 1994. The CEO, the board of directors, and executive compensation: Economic and psychological perspectives. Unpublished manuscript, Stanford University, USA.
42. Mallin, C. A. 1996. The voting framework: A comparative study of voting behavior of institutional investors in the US and the UK. Corporate Governance: An International Review, 4: 107-122.
43. Murphy, K. J. 1985. Corporate performance and managerial remuneration: An empirical analysis. Journal of Accounting and Economics, 7: 11-42.
44. Murphy, K. J. 1986. Incentives, learning, and compensation: A theoretical and empirical investigation of managerial labor contracts. Rand Journal of Economics, 17: 59-76.
45. Murphy, K. J. 1998. Executive compensation. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics: 2485-2563. Amsterdam: Elsevier.
46. Murphy, K. J. 2002. Explaining executive compensation: Managerial power versus the perceived cost of stock options. The University of Chicago Law Review, 69: 847-869.
47. Murphy, K. J. & Sandino, T. 2010. Executive pay and "independent" compensation consultants. Journal of Accounting and Economics, 49: 247-262.
48. Myers, S. 1977. Determinants of corporate borrowing. Journal of Financial Economics, 5: 147-175.
49. Newman, H. A. & Mozes, H. A. 1999. Does the composition of compensation committee influence CEO compensation practices? Financial Management, 28: 41-53.
50. Raheja, C. J. 2005. Determinants of board size and composition: A theory of corporate boards. Journal of Financial and Quantitative Analysis, 40: 283-306.
51. Securities and Exchange Commission. 2006. Executive compensation and related person disclosure. Releases No. 33-8732A, September 8.
52. Smith, C. & Watts, R. 1992. The investment opportunity set and corporate financing, dividends, and compensation policies. Journal of Financial Economics, 32: 263-292.
53. Stapledon, G. P. 1996. Institutional shareholders and corporate governance. Oxford, UK: Clarendon Press; New York: Oxford University Press.
54. Wade, J. B., Porac, J. F., & Pollock, T. G. 1997. Worth, words, and the justification of executive pay. Journal of Organizational Behavior, 18: 641-664.
55. Weisbach, M. S. 2007. Optimal executive compensation versus managerial power: A review of Lucian Bebchuk and Jesse Fried's pay without performance: The unfulfilled promise of executive compensation. Journal of Economic Literature, 45: 419-428.