Vox:
CEO pay and the rise of relative performance contracts: the role of governance
5 August 2016
Lacklustre growth seems to be the new normal almost everywhere in the world except for one area - CEO pay. This column uses data on UK publicly listed firms to examine whether weak governance leads to pay rises for CEOs that are not justified by performance. CEO pay asymmetry - pay responding more to increases in firm performance than to decreases - appears to occur mainly in firms with a low share of institutional owners able to exert external control. CEOs at such firms are also more likely to be paid for 'luck', with pay rises rewarding random positive shocks unrelated to performance.
This article was published online by the Vox blog on August 5, 2016
Link to article here
Related publications
CEO Pay and the Rise of Relative Performance: A question of governance?, Brian Bell and John Van Reenen, Centre for Economic Performance Discussion Paper No. 1439, July 2016
Related links
Brian Bell webpage
John Van Reenen webpage
Growth Programme webpage