Factors Influencing CEO Compensation in US Telecommunication Industry

Abstract

The objective of this paper is to define the relationship between a set of factors and CEO compensation that will enable companies to imply better corporate governance practices in their management process. Developed econometric model is tested on the data of US telecom companies for the period 2004-2012. The study revealed that CEO compensation is strongly and positively related to revenue and earnings per share of the company, and unrelated to return on net assets and market value added. These results enable companies to use CEO compensation system as an effective mechanism to eliminate agency problem and, consequently, agency costs. The main directions for further research in this field are outlined.