Shifting the Goalposts? Analysing Changes to Performance Peer Groups Used to Determine the Remuneration of FTSE 100 CEOs

British Journal of Management - Tập 28 Số 2 - Trang 265-279 - 2017
Rodion Skovoroda1, Alistair Bruce1
1Nottingham University Business School, Nottingham University, Jubilee Campus, Wollaton Road, Nottingham, NG8 1BB UK

Tóm tắt

This paper examines year‐on‐year changes to the composition of performance peer groups used for relative performance evaluation in setting CEO pay in FTSE 100 companies and finds evidence of peer selection bias. The authors find that firms keep their peer groups weak by excluding relatively stronger performing peers. They also show that peer selection bias is less pronounced in firms with higher institutional investor ownership, which suggests that institutional investors might be aware of the risks of peer selection bias. The results suggest that peer group modifications can be viewed, at least in part, as an expression of managerial rent‐seeking.

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