The Impact of Firm Performance on Executive Compensation in France

Abstract

The purpose of this article is to model the executive compensation in France. From a sample of 90 companies included in the SBF 120 over 2004, we examine whether there is a significant link between the overall executive compensation and corporate performance, and then determine the relationship between the fixed and variable part of the compensation with performance. Our findings highlight in particular the level of total executive compensation that is linked with relatively improved performance. And clearer, the pay of executive increases with the increase of financial performance, whereas, the bonus depends on level of accounting performance. The grant of options to executive is relatively linked to the financial performance of the enterprise level.