There is growing concern that over recent decades CEOs tend to earn overwhelmingly more than the average worker. This throws the researchers to question the economic benefit of paying CEOs huge amount of money while we have discouraged workers who may become less productive and therefore lowering the firm profitability. Researchers have taken positions on both sides of the debate over whether the level of CEO’s pay is economically justified or is the result of managerial power. This study sought to establish the extent of power that CEO’s possess among Kenya firms listed at the Nairobi Securities Exchange. CEO’s power was measured in terms of structural power, ownership power, CEO tenure and Board composition. The study used secondary data. Data was collected from 60 firms listed at the NSE. Using a cross sectional design, a regression model was fitted to show the relationship between CEO’s power and CEO’s compensation. Descriptive and inferential results were obtained. The findings revealed that in the Kenyan context CEO’s power does not significantly influence CEO’s compensation. CEO’s pay is market-determined and reflects the bidding by firms for scarce executive talent. The increase in CEO’s pay is due to the rise in incentive compensation that links pay to firm performance and aligns the incentives of managers with those of shareholders.
| Published in | European Business & Management (Volume 6, Issue 6) |
| DOI | 10.11648/j.ebm.20200606.12 |
| Page(s) | 136-142 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2024. Published by Science Publishing Group |
CEOs Power, CEOs Compensation, Profitability, Firms, Nairobi Securities Exchange
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APA Style
Omamo Anne, Peter K’obonyo, Florence Muind Florence Muind. (2020). Influence of CEOs Power on Their Compensation. European Business & Management, 6(6), 136-142. https://doi.org/10.11648/j.ebm.20200606.12
ACS Style
Omamo Anne; Peter K’obonyo; Florence Muind Florence Muind. Influence of CEOs Power on Their Compensation. Eur. Bus. Manag. 2020, 6(6), 136-142. doi: 10.11648/j.ebm.20200606.12
AMA Style
Omamo Anne, Peter K’obonyo, Florence Muind Florence Muind. Influence of CEOs Power on Their Compensation. Eur Bus Manag. 2020;6(6):136-142. doi: 10.11648/j.ebm.20200606.12
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Download@article{10.11648/j.ebm.20200606.12,
author = {Omamo Anne and Peter K’obonyo and Florence Muind Florence Muind},
title = {Influence of CEOs Power on Their Compensation},
journal = {European Business & Management},
volume = {6},
number = {6},
pages = {136-142},
doi = {10.11648/j.ebm.20200606.12},
url = {https://doi.org/10.11648/j.ebm.20200606.12},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20200606.12},
abstract = {There is growing concern that over recent decades CEOs tend to earn overwhelmingly more than the average worker. This throws the researchers to question the economic benefit of paying CEOs huge amount of money while we have discouraged workers who may become less productive and therefore lowering the firm profitability. Researchers have taken positions on both sides of the debate over whether the level of CEO’s pay is economically justified or is the result of managerial power. This study sought to establish the extent of power that CEO’s possess among Kenya firms listed at the Nairobi Securities Exchange. CEO’s power was measured in terms of structural power, ownership power, CEO tenure and Board composition. The study used secondary data. Data was collected from 60 firms listed at the NSE. Using a cross sectional design, a regression model was fitted to show the relationship between CEO’s power and CEO’s compensation. Descriptive and inferential results were obtained. The findings revealed that in the Kenyan context CEO’s power does not significantly influence CEO’s compensation. CEO’s pay is market-determined and reflects the bidding by firms for scarce executive talent. The increase in CEO’s pay is due to the rise in incentive compensation that links pay to firm performance and aligns the incentives of managers with those of shareholders.},
year = {2020}
}
TY - JOUR T1 - Influence of CEOs Power on Their Compensation AU - Omamo Anne AU - Peter K’obonyo AU - Florence Muind Florence Muind Y1 - 2020/11/30 PY - 2020 N1 - https://doi.org/10.11648/j.ebm.20200606.12 DO - 10.11648/j.ebm.20200606.12 T2 - European Business & Management JF - European Business & Management JO - European Business & Management SP - 136 EP - 142 PB - Science Publishing Group SN - 2575-5811 UR - https://doi.org/10.11648/j.ebm.20200606.12 AB - There is growing concern that over recent decades CEOs tend to earn overwhelmingly more than the average worker. This throws the researchers to question the economic benefit of paying CEOs huge amount of money while we have discouraged workers who may become less productive and therefore lowering the firm profitability. Researchers have taken positions on both sides of the debate over whether the level of CEO’s pay is economically justified or is the result of managerial power. This study sought to establish the extent of power that CEO’s possess among Kenya firms listed at the Nairobi Securities Exchange. CEO’s power was measured in terms of structural power, ownership power, CEO tenure and Board composition. The study used secondary data. Data was collected from 60 firms listed at the NSE. Using a cross sectional design, a regression model was fitted to show the relationship between CEO’s power and CEO’s compensation. Descriptive and inferential results were obtained. The findings revealed that in the Kenyan context CEO’s power does not significantly influence CEO’s compensation. CEO’s pay is market-determined and reflects the bidding by firms for scarce executive talent. The increase in CEO’s pay is due to the rise in incentive compensation that links pay to firm performance and aligns the incentives of managers with those of shareholders. VL - 6 IS - 6 ER -
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