Chief executive compensation: A study of the intersection of markets and political processes

Abstract

A model of the determinants of chief executive (CEO) compensation is presented and tested. Based on a sample from the leisure industry, the study finds that CEO pay has complex links to several factors: firm size, complexity, performance, CEO power, board vigilance, and the CEO's human capital. The study includes a separate examination of CEO salary and bonus, as well as a test of pay determination across McEachern's (1975) ownership categories.