Does the Composition of the Compensation Committee Influence CEO Compensation Practices?

From: Financial Management | Date: September 22, 1999| Author: Mozes, Haim A.; Newman, Harry A. | Copyright information

This paper examines whether compensation committee composition affects CEO compensation practices. We find that CEOs receive preferential treatment (at shareholders' expense) when insiders are members of the compensation committee. We do not find that CEO compensation is greater in firms that have insiders on the compensation committee than it is in firms that do not. However, we show that the relation between CEO compensation and performance is more favorable toward the CEO (i.e.,...

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