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The influence of comparative pay, customer service measures and accounting profits upon CEO pay in the UK privatised water industry

Ogden, S.; Watson, R.

Authors

S. Ogden

R. Watson



Abstract

The paper investigates the influence of comparative CEO pay levels, customer service measures and accounting profits upon CEO pay in the UK privatised water industry over the period from 1992 to 2001. We argue that political and regulatory considerations can be expected to constrain CEO pay levels and to motivate remuneration committees to link CEO pay awards to simultaneous improvements in both profits and customer service improvements. The empirical results indicate that the most important drivers of CEO pay changes are sales growth and a partial adjustment to comparable UK CEO pay levels. Customer service improvements and accounting profits are also significantly related to CEO pay awards. However, consistent with regulatory incentives that mitigate the inherent financial conflicts between the two performance measures, the results suggest that the influence of customer service improvements upon CEO pay is largely indirect and stems from the impact it has upon the benchmark profit used for performance-related pay purposes.

Citation

Ogden, S., & Watson, R. (2007). The influence of comparative pay, customer service measures and accounting profits upon CEO pay in the UK privatised water industry. Accounting and Business Research, 37(3), 199-215. https://doi.org/10.1080/00014788.2007.9730072

Journal Article Type Article
Publication Date Sep 1, 2007
Deposit Date Aug 21, 2008
Journal Accounting and Business Research
Print ISSN 0001-4788
Electronic ISSN 2159-4260
Publisher Taylor and Francis Group
Peer Reviewed Peer Reviewed
Volume 37
Issue 3
Pages 199-215
DOI https://doi.org/10.1080/00014788.2007.9730072