Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs

Skovoroda, Rodion and Bruce, Alistair (2017) Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs. British Journal of Management, 28 (2). pp. 265-279. ISSN 1467-8551

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Abstract

This paper examines year-on-year changes to the composition of performance peer groups used for Relative Performance Evaluation (RPE) in setting CEO pay in FTSE 100 companies and finds evidence of peer selection bias. We find that firms keep their peer groups weak by excluding relatively stronger performing peers. We 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.

Item Type: Article
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.
Keywords: Corporate Governance, Executive Compensation, Performance Peer Groups
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: 10.1111/1467-8551.12209
Depositing User: Howis, Jennifer
Date Deposited: 03 Nov 2016 14:25
Last Modified: 15 Oct 2017 06:03
URI: http://eprints.nottingham.ac.uk/id/eprint/38471

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