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An Explanation of Top Executive Pay: A UK Study
Author(s) -
McKnight Phillip J.
Publication year - 1996
Publication title -
british journal of industrial relations
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.665
H-Index - 70
eISSN - 1467-8543
pISSN - 0007-1080
DOI - 10.1111/j.1467-8543.1996.tb00490.x
Subject(s) - salary , remuneration , executive compensation , sample (material) , economics , set (abstract data type) , business , accounting , demographic economics , labour economics , actuarial science , management , finance , corporate governance , chemistry , chromatography , computer science , market economy , programming language
This study extends prior research by separating executive remuneration into salary and annual bonus for the purpose of empirically verifying their determinants. A model is introduced to estimate the extent to which pay and its determinants are related. Based on a net sample of 90 large UK firms, salary was found to be strongly related to firm size, as opposed to annual bonus, which was modestly associated with both firm performance and size. An important discovery was that salary showed no relationship to a firm's economic performance. The inability to find any association between salary and performance suggests that each component of pay has a different set of determining factors.