Discussion of “the functional background of the compensation committee chair: the choice and weight of performance measures in CEO compensation”

Abstract

PurposeNwaeze and Kalelkar (2023) examine the association between the functional background of the compensation committee chair (CC chair) and CEO compensation using S&P 500 firms from 2008 to 2018. They find that the CC chair's functional background is positively associated with the adoption of performance measures that are more aligned with such background. This discussion starts with Nwaeze and Kalelkar's (2023) incremental contribution, and offers suggestions on two areas for improvement. First, the authors could provide a more focused discussion of the conceptual framework. Second, the authors could improve their empirical design and interpretation of results. Avenues for future research are also suggested.Design/methodology/approachThis discussion suggests methods and model specifications that may strengthen the research design, facilitate the interpretation of results, and provide additional insights.FindingsThe discussed paper could improve the reliability and rigor of the empirical tests and the conclusions by providing more contextual and granular information on firms' actual CEO compensation arrangements, using more careful testing procedures, and enhancing clarity in the writing.Originality/valueResearchers could be interested in alternative perspectives and richer analyses of non-agency model based determinants of CEO compensation.