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

Skovoroda, Rodion; Bruce, Alistair

Abstract

© 2016 British Academy of Management 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.

Citation

Skovoroda, R., & Bruce, A. (2017). Shifting the Goalposts? Analysing Changes to Performance Peer Groups Used to Determine the Remuneration of FTSE 100 CEOs. British Journal of Management, 28(2), 265-279. https://doi.org/10.1111/1467-8551.12209

• Journal Article Type: Article
• Acceptance Date: Oct 27, 2016
• Online Publication Date: Dec 13, 2016
• Publication Date: Apr 1, 2017
• Deposit Date: Nov 3, 2016
• Publicly Available Date: Dec 14, 2018
• Journal: British Journal of Management
• Print ISSN: 1045-3172
• Electronic ISSN: 1467-8551
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 28
• Issue: 2
• Pages: 265-279
• DOI: https://doi.org/10.1111/1467-8551.12209
• Keywords: Corporate Governance, Executive Compensation, Performance Peer Groups
• Public URL: https://nottingham-repository.worktribe.com/output/970165
• Publisher URL: http://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12209/abstract
• Additional Information: This is the peer reviewed version of the following article: Skovoroda, R. and Bruce, A. (2016), Shifting the Goalposts? Analysing Changes to Performance Peer Groups Used to Determine the Remuneration of FTSE 100 CEOs. Brit J Manage. , which has been published in final form at http://dx.doi.org/10.1111/1467-8551.12209. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
• Contract Date: Nov 3, 2016