CEO pay in UK FTSE 100: pay inequality, board size and performance

Forbes, W.P. and Pogue, M. and Hodgkinson, L. (2014) CEO pay in UK FTSE 100: pay inequality, board size and performance. The European Journal of Finance. DOI: 10.1080/1351847X.2014.885457

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In this paper we examine the costs of seemingly excessive pay awards to CEOs within the UK FTSE 100 in the last decade and the consequent growth in executive pay inequality. In presenting this evidence we describe variations in the whole distribution of executive pay, rather than invoking some arbitrary cut-off point, to determine how changes in shareholder value match with concurrent changes in the distribution of executive pay. We ask whether the impact of executive pay inequality is a function of board size, rendering the CEO pay slice measure problematic in this context? We then question whether the interaction of board size and corporate performance, as measured by shareholder returns, explain variations in the sensitivity of the pay�performance relationship for UK FTSE 100 executives. We advance the Gini coefficient as a preferable measure of executive pay inequality in order to capture the impact of perceived inequality upon corporate performance.

Item Type: Article
Subjects: Research Publications
Departments: College of Business, Law, Education and Social Sciences > Bangor Business School
Date Deposited: 10 Jun 2015 02:40
Last Modified: 09 Oct 2015 02:31
ISSN: 1351-847X
Publisher's Statement: This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 09/04/2014, available online: http://wwww.tandfonline.com doi 10.1080/1351847X.2014.885457.
URI: http://e.bangor.ac.uk/id/eprint/4635
Identification Number: DOI: 10.1080/1351847X.2014.885457
Publisher: Taylor & Francis
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