On the Right Side of the Faultline: Effects of Subgroups and CEO Inclusion on CEO Compensation
研究董事会断层线形成的子群体如何影响CEO薪酬设定，发现若CEO与薪酬委员会成员同属一个子群体，强断层线会推高CEO薪酬，且董事与CEO的共事时间会强化这一效应。
Abstract This study examines how subgroup formation resulting from group faultlines can affect corporate boards’ CEO compensation‐setting process. Group faultlines are hypothetical dividing lines that can split the board into subgroups based on directors’ diversity characteristics. Using a sample of US firms for the period 2007–2019, we find that if the CEO demographically belongs to the same faultline‐based subgroup as corporate directors who are members of the compensation committee, strong faultlines lead to higher CEO compensation. Furthermore, we show that joint tenure of directors and the CEO strengthens this relationship. Our results are robust to endogeneity concerns and a battery of sensitivity tests. Our findings make important contributions to the literature on CEO compensation, corporate governance and faultlines, as we consider not only the existence of faultlines in the board context but also how the composition of identity‐based subgroups affects CEO compensation.