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Pay at the Executive Suite: How do U.S. Banks Compensate their Top Management Teams?

  • Author(s): Ang, James
  • Lauterbach, Beni
  • Schreiber, Ben Z.
  • et al.
Abstract

The study examines how 166 U.S. banks compensated their top management teams (top 4-5 executives in each bank) during 1993-1996. We observe two tiers of compensation in the executive suite: CEO and the rest. CEOs are paid more, especially in performance contingent compensation. The weight of base salary in CEO’s pay is significantly lower than in other senior managers’ pay, and CEO’s pay performance elasticity is significantly higher. Beyond the CEO, top executives have a similar structure of compensation and similar pay performance elasticities. Our evidence is consistent with agency theory, and with several labor economics models.

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