Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE 100 CEOs

Skovoroda, R. and Bruce, A. ORCID: 0000-0001-5748-0701, 2017. Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE 100 CEOs. British Journal of Management, 28 (2), pp. 265-279. ISSN 1045-3172

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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: Journal article
Publication Title: British Journal of Management
Creators: Skovoroda, R. and Bruce, A.
Publisher: Wiley-Blackwell
Date: April 2017
Volume: 28
Number: 2
ISSN: 1045-3172
Identifiers:
NumberType
10.1111/1467-8551.12209DOI
Divisions: Schools > Nottingham Business School
Depositing User: Jonathan Gallacher
Date Added: 29 Nov 2018 16:39
Last Modified: 03 Sep 2019 11:40
URI: http://irep.ntu.ac.uk/id/eprint/35185

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