Edited by Christine A. Mallin
The global financial crisis has led to more and more focus on corporate governance and financial institutions. There has been much coverage in the media about various corporate governance related issues in banks and other financial institutions, such as executive directors’ remuneration and bankers’ bonuses, board composition and board diversity. This engaging book, dedicated to the corporate governance of banks and other financial institutions, makes a timely and accessible contribution to the literature in this area. The chapters highlight many of the shortcomings of corporate governance which have led to financial scandals, whilst indicating areas where corporate governance can be strengthened and improved.
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Chapter 4: CEO compensation in US financial institutions
The authors investigate chief executive officer (CEO) compensation in US financial institutions. Specifically, they compare the level and structure of CEO pay in financial institutions to industrial firms in the Standard & Poor’s (S & P) 1500 index in 2013. In general, they find that total CEO compensation is lower in financial institutions compared to non-financial firms. Also, they find that CEO salaries are lower in finance companies, but CEO bonuses are not significantly different. There is some evidence that CEO equity ownership percentages are lower in financial firms, but the finding is sensitive to model specification. There is variation in the level of CEO compensation within the financial sector itself. Specifically, they find that CEO compensation in commercial banks is lower than that in other non-bank financial institutions.
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