Independent versus non-independent outside directors in European companies: who has a say on CEO compensation?

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Andres , P D , Arranz-Aperte , L & Rodriguez-Sanz , J A 2017 , ' Independent versus non-independent outside directors in European companies: who has a say on CEO compensation? ' , BRQ Business Research Quarterly , vol. 20 , no. 2 , pp. 79-95 . https://doi.org/10.1016/j.brq.2017.02.001

Title: Independent versus non-independent outside directors in European companies: who has a say on CEO compensation?
Author: Andres, Pablo de; Arranz-Aperte, Laura; Rodriguez-Sanz, Juan Antonio
Contributor: Hanken School of Economics, HCCG - Hanken Centre for Corporate Governance, Helsinki
Belongs to series: BRQ Business Research Quarterly
ISSN: 2340-9436
Abstract: Our study reveals how two separate dimensions of board composition-the proportion of independent directors and of non-independent directors-influence CEO compensation in Western European firms. Controlling for the simultaneous determination of CEO pay structure and board design, we find that firms with a higher proportion of non-independent outsiders on their boards pay less direct compensation (salary + bonus) and less equity-linked compensation to their CEOs. By contrast, CEOs working for firms with more independent boards receive more equity based-pay. When we control for the fact that equity linked is not granted systematically in Europe we find that firms with more independent directors on the board tend to grant equity linked compensation more often than firms with more non independent outside directors. Our results challenge the commonly accepted view of independent directors as safeguards of shareholder value, uncovering the relevance of non-independent outsiders for pay moderation and incentives.
Date: 2017
Subject: 511 Economics
independent directors
CEO pay
Corporate Governance
Europan Companies
KOTA2017
PREM2017-extra
1 - Open access publication channel
1 - Self archived
https://helda.helsinki.fi/dhanken/handle/123456789/174313
1- Minst en av författarna har en utländsk affiliation
1- Publicerad utomlands
0- Ingen affiliation med ett företag
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