Date of this Version
The Review of Financial Studies
We compute and compare risk-adjusted CEO pay in the United States and United Kingdom, where the risk adjustment is based on estimated risk premiums stemming from the equity incentives borne by CEOs. Controlling for firm and industry characteristics, we find that U.S. CEOs have higher pay, but also bear much higher stock and option incentives than U.K. CEOs. Using reasonable estimates of risk premiums, we find that risk-adjusted U.S. CEO pay does not appear to be large compared to that of U.K. CEOs. We also examine differences in pay and equity incentives between a sample of non-U.K. European CEOs and a matched sample of U.S. CEOs, and find that risk-adjusting pay may explain about half of the apparent higher pay for U.S. CEOs.
This is a pre-copyedited, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The version of record is available online at: http://rfs.oxfordjournals.org/content/24/2/402.abstract.
CEO compensation, incentives, risk aversion, corporate governance, international comparisons
Conyon, M. J., Core, J. E., & Guay, W. R. (2011). Are U.S. CEOs Paid More Than U.K. CEOs? Inferences From Risk-Adjusted Pay. The Review of Financial Studies, 24 (2), 402-438. http://dx.doi.org/10.1093/rfs/hhq112
Date Posted: 27 November 2017
This document has been peer reviewed.