| This study examines the level and structure of CEO compensation for 2448 CEOs in 1622 firms from 1997 through 2002. Based on agency and expectancy theories, this study tests the hypotheses that corporate diversification is associated with the level and structure of CEO compensation. The results found that the higher degree of international diversification, higher accounting earning performance, higher investment opportunities, and larger firm size, CEOs receive higher levels of compensation. In contrast, the higher the degree of industrial diversification, CEOs receive less levels of total compensation, long-term compensation, and stock options. CEOs own greater outstanding stock make less use of CEO compensation.; In addition, this study fords that both international and industrial diversification is associated with a greater use of current compensation (salary and bonus) and with a greater reliance on accounting-based, rather than market-based measures of firm performance. The study results also show that, firm performance, stock ownership and firm size moderate the relationship between corporate diversification and total compensation. Contrary to findings in prior studies, there is a little evidence that uses of CEO compensation paid increases with stock return performance, as traditionally measured. |
