Executive compensation and ownership structure

Abstract

The objective of this paper is to highlight the impact of ownership discrepancy and type (managers, families, institutions) on executive compensation. Based on a sample of French listed firms and using panel data regressions, the results show that capital concentration (Jensen 1986) negatively affects both the level of total executive compensation and the probability of use of stock option incentive plans. This confirms our theoretical alignment hypothesis. Moreover, the results show no evidence of the existence of a significant effect of ownership discrepancy on managerial compensation. Institutional shareholders are likely to encourage the use of stock option incentive plans and managerial ownership positively and significantly influences the level of total and fixed compensation. Family shareholding negatively affects executive compensation variables.