Authors: Flora Niu
Addresses: School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario, N2L 3C5, Canada
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.
Keywords: board of directors; Canada; director compensation; dual class structure; board independence; pay for performance; cash compensation; ownership structure; firm performance; shareholder value; corporate governance.
International Journal of Corporate Governance, 2008 Vol.1 No.2, pp.162 - 184
Published online: 05 Oct 2008 *Full-text access for editors Access for subscribers Purchase this article Comment on this article