CEO Compensation: Does Financial Crisis Matter?

Prasad Vemala, Lam Nguyen, Dung Nguyen, Alekhya Kommasani

Abstract


The topic of CEO compensation has been highly debatable. The financial crisis of 2008 further prompted public
and media to question executive compensation practices in the United States. This study investigates the effect of
the financial crisis on CEO compensation and also examines various determinants of CEO compensation. Using
a sample of Fortune 500 firms and 2241 observations, we find that financial crisis has a small but significant
effect on CEO compensation. Firm performance, firm size, and CEO duality were found to have a significant
effect on CEO compensation both pre and post-crisis. One major difference found between pre and post-crisis
was in the composition of pay. While cash compensation decreased significantly post-crisis,
equity-compensation increased.

Full Text: PDF DOI: 10.5539/ibr.v7n4p125

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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