The Determinants of Chief Executive Officer Compensation in Jordanian Industrial Corporations

Abstract

The main objective of the study is to investigate factors that may affect the CEO compensation in developing countries namely in Jordan. In order to achieve this objective, a sample of 266 industrial companies listed on the Amman Stock Exchange during the period 2005-2010 was used to examine the determinants of compensation of CEO. The findings of regression analysis revealed that CEO compensation is strongly affected by company's size and CEO tenure, where CEOs with long tenure or in large firms are more compensated. Results also showed that the board of directors is influenced by the presence of the CEO among them in deciding his/her compensation. However, results revealed a significant inverse relationship between CEO age and CEO compensation. This result is largely consistent with many of the guidelines for improving corporate governance that have been recently promulgated by various groups.