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Executive Compensation and Board Governance in US Firms


  • I thank Steve Thompson for his support in the preparation of this study. I am grateful to an anonymous referee for comments. I thank the following for discussions and advice: Matthew Bidwell, Rocio Bonet, Peter Cappelli, Gina Dokko, Lerong He, Kevin Murphy, Simon Peck, Graham Sadler, Mike Useem, Zhifang Zhang and seminar participants at Lancaster University, Instituto de Empresa, ESSEC Business School and Singapore Management University. Research assistance was provided by Teresa Baik, Kofi Darkoh, Chloe Wayne and Zhifang Zhang. Support from the Center for Human Resources at the Wharton School is gratefully acknowledged.

Corresponding author: Martin J. Conyon, Lancaster University Management School, Lancaster University, Bailrigg, Lancaster, Lancashire LA1 4YX. Email:


This paper investigates US executive compensation and governance. I find on average executive pay is positively correlated to firm performance and firm size. Executive pay contracts contain significant equity incentives. The use of restricted stock has become more important over time. Stock options remain an important part of executive pay. Compensation committees are generally independent and there is little evidence they result in ‘too high’ CEO pay. The Dodd-Frank Act changed the corporate governance landscape. Firms use compensation consultants that are generally engaged by the board and not management. ‘Say-on-Pay’ gave shareholders a non-binding mandatory vote on executive pay. Typically, stockholders endorse executive pay plans with very few resolutions failing.