Are CEOs Paid for Performance

What is it about?

This study provides insight into CEO compensation dynamics in the public sector and private sector publicly listed firms in New Zealand. This research uses descriptive statistics, OLS regression, and the difference-in-difference method to analyze the compensation-performance relationship for the period 2005 to 2012. Our findings show that CEOs in the private sector publicly listed firms are receiving higher remuneration benefits. Our results suggest that firm sales and past compensation are the most important determinants of CEO cash-based as well as total compensation. Firms with a larger board size and the presence of a formal remuneration committee are likely to provide higher cash compensation than those without.

Featured Image

Why is it important?

The empirical results show that firm size (sales) is the most important determinant of CEO cash and total compensation in publicly listed companies, SOEs, and CRIs. Our results also show that past year compensation for CEOs is an additional important determinant of current year compensation for CEOs in publicly listed companies and SOEs. The presence of female directors, a remuneration committee, and agency costs do exert a moderating effect on CEO cash compensation.

Perspectives