CEO Compensation and Bank Performance

Abstract

This study sets out to discover the determinants of compensation of the chief executive officers in the banking industry of Pakistan. Accounting based performance measures and size of the firm have been used as predictors. Results of the study are consistent with arguments, suggesting significant and positive impact of size (assets) of the firm on CEO compensation while no association is found with either of the performance measure of the firm except income before tax (IBT). Return on Assets and Return on Equity failed to explain the given phenomenon. The study further elaborates that number of employees (NOEMP) greatly influences on CEO compensation but negatively. This relationship may be due to the unique characteristics of Pakistan's social and economic structure