Board control and ceo compensation
Article first published online: 8 NOV 2006
Copyright © 1994 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 15, Issue 5, pages 335–344, June 1994
How to Cite
Boyd, B. K. (1994), Board control and ceo compensation. Strat. Mgmt. J., 15: 335–344. doi: 10.1002/smj.4250150502
- Issue published online: 8 NOV 2006
- Article first published online: 8 NOV 2006
- Manuscript Revised: 11 NOV 1993
- Manuscript Received: 13 JUL 1992
- Boards of directors;
- executive compensation;
- agency theory;
- strategy implementation
The board of directors has been identified as a key internal control mechanism for setting CEO compensation. Theory suggests that CEOs will attempt to circumvent board control in an effort to maximize salary. This hypothesis was tested using a sample of 193 firms in a cross-section of industries. Corporate governance literature was reviewed to develop a multiple indicator measure of board control. Although, as hypothesized, CEO salaries were greater in firms with lower levels of control, CEO compensation was not significantly related to firm size or profitability.