Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/206360 
Year of Publication: 
2017
Citation: 
[Journal:] BRQ Business Research Quarterly [ISSN:] 2340-9436 [Volume:] 20 [Issue:] 2 [Publisher:] Elsevier España [Place:] Barcelona [Year:] 2017 [Pages:] 79-95
Publisher: 
Elsevier España, Barcelona
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."
Subjects: 
Independent directors
CEO compensation
Board of directors
Corporate governance
European companies
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article

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