Director cash compensation, ownership structure and director pay for performance
by Flora Niu
International Journal of Corporate Governance (IJCG), Vol. 1, No. 2, 2008

Abstract: This paper examines the relationship between director cash compensation and ownership structure and their interactions with board independence and firm performance. Using a sample of Canadian public companies with board compensation data from 2003 to 2005, the results suggest that directors in dual class firms with added agency problems resulting from the deviation from the one-vote-per-share structure extract excess cash compensation to entrench themselves at the cost of destroying shareholder value. However, board independence appears to be an effective governance mechanism in mitigating agency conflicts and improving director pay for performance sensitivity.

Online publication date: Sun, 05-Oct-2008

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