CEO Pay for Performance Sensitivity in the Restaurant Industry: What Makes it Move?

ABSTRACT

The changing business conditions and the inefficient corporate governance in the restaurant industry turned shareholders' attention to the executive compensation. This study examines determinants of the sensitivity in Corporate Executive Officers' (CEOs) cash compensation. The contribution of this study is that it uses pooled regression and analyzes annual percentage change in CEO cash compensation. The findings revealed that company stock returns and return on assets emerged as significant determinants of CEO pay sensitivity. The results of this study show that almost 90% of the variation in the sensitivity of CEO compensation in the restaurant industry remains unexplained and is left for future research.

KEYWORDS:

• Pay for performance
• executive compensation
• restaurant industry
• pay sensitivity

Notes

Madanoglu, M. (2005). Underlying risk dimensions in the restaurant industry: A strategic finance approach. Unpublished doctoral dissertation, Virginia Polytechnic Institute and State University–Blacksburg.