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The Impact of Ownership Structure on the Structure of Compensation Committees
Author(s) -
Newman Harry A.
Publication year - 2000
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00329
Subject(s) - compensation (psychology) , executive compensation , accounting , business , stock options , stock (firearms) , criticism , corporate governance , finance , law , psychology , political science , social psychology , engineering , mechanical engineering
The practice of appointing insiders to the compensation committee has drawn considerable criticism since compensation committees play an important role in executive compensation decisions. This paper examines the association between the firm’s ownership structure and the decision to use insiders on the compensation committee. The paper finds that CEO stock ownership is positively related to the presence of insiders on the compensation committee whereas the stockholdings of non‐executive employees, as a group, is negatively related to the presence of insiders.