Abstract
[Purpose] The purpose of this study is to confirm whether CEO tenure is reflected in the selection criteria of the peer firm when companies select the peer firms for CEO’s relative performance evaluation in setting CEO compensation.
 [Methodology] For empirical analysis, this study used US non-financial listed companies.
 [Findings] The main results are as follows. First, the performance of the peer firms, which are formed based on the similarities of industry, the firm size, and the CEO’s tenure, is significantly associated with CEO compensation. Second, only the unsystematic performance measured based on the peer firm that reflects the same industry, the size of the firm and the tenure of CEO has a significant positive coefficient value in the verification of the strong form model. These results of the analysis of the CEO’s tenure can also be interpreted as reflecting the tenure of CEO in selecting the peer firms in order to motivate the CEO’s efforts toward maximizing firm value.
 [Implications] This study provides meaningful contribution to the literature based on finding that companies reflect CEO’s tenure as an additional criterion for selecting peer firms for CEO’s relative performance evaluation.
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