Pay for Performance: An Empirical Review

Abstract

This study investigated the relationship between the CEO cash compensation and firm performance of the large New York Stock Exchange (NYSE) companies from 2005 to 2010. The quantitative research method was selected for this research study. The forty large companies were selected through a stratified sampling method. The research question for this research study was: among the NYSE companies, what relationship is there between CEO cash compensation and firm performance. The results found that, there was a relationship between CEO salary, bonus, and firm performance, among the NYSE companies. The correlations between CEO salary, CEO bonus, return on assets, return on equity, earnings per share, cash flow per share, net profit margin, common stock outstanding, book value of common stock outstanding, and market value of common stocks outstanding, were characterized as weak ratios respectively.