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Pay comparability across and within UK boards: an empirical analysis of the cash pay awards to CEO and other board members

Ezzamel, M.; Watson, R.

Authors

M. Ezzamel

R. Watson



Abstract

Drawing on the literature on social comparison and equity theories, this paper analyses the determinants of, and the relationships between, the cash pay awards of CEOs and other board members for a sample of large UK companies over the period 1992–95. Our results suggest that external labour market and internal (i.e., within board) pay comparisons are important in explaining both CEO and other directors' pay awards. In the case of CEOs, however, there is evidence of an asymmetric adjustment to prior period pay anomalies, whereby the pay of the relatively underpaid executives displays significantly greater sensitivity to external market comparison pay levels. This asymmetric adjustment process results in a 'bidding-up' of average CEO pay relative to other board members over the four year period investigated.

Citation

Ezzamel, M., & Watson, R. (2002). Pay comparability across and within UK boards: an empirical analysis of the cash pay awards to CEO and other board members. Journal of Management Studies, 39(2), 207-232. https://doi.org/10.1111/1467-6486.00289

Journal Article Type Article
Publication Date Mar 1, 2002
Deposit Date Mar 26, 2007
Journal Journal of Management Studies
Print ISSN 0022-2380
Electronic ISSN 1467-6486
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 39
Issue 2
Pages 207-232
DOI https://doi.org/10.1111/1467-6486.00289

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