Abstract
We examine how the level and structure of CEO pay is influenced by the characteristics and past experience of the members of the compensation committee, and also how these characteristics and experiences affect the probability of committee appointment. Our main findings indicate that (1) CEO pay in the current firm is more likely to be above (or below) market if CEO pay in the committee-members’ prior-firm experience was also above (or below) market; (2) the influence of this past experience diminishes over time as current year’s pay decisions are more likely to be influenced by experience from recent past years than from experience further past; and (3) while new directors are more likely to be appointed to the compensation committee if they have prior compensation-committee experience, we find no evidence that new directors with experience with highly paid CEOs are more likely to be appointed to compensation committees, and also no evidence that that companies choose compensation committees with experiences matching the focal firm’s pay philosophy. Overall, our paper extends the literature on board of directors affecting CEO pay, and also contributes to the literature on managerial styles and contagion.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
