The Role of Defined Benefit Pension Plans in Executive Compensation

Brian Cadman*, Linda Vincent

*Corresponding author for this work

Research output: Contribution to journalArticle

7 Scopus citations

Abstract

Although defined benefit (DB) pension plans constitute a significant portion of both annual compensation and firm-related wealth for many CEOs, prior studies of CEO compensation contracts generally exclude these plans from their analyses due to lack of data. Taking advantage of recently increased disclosure requirements, we analyse the role of DB pension plans in these contracts. We find that firms with CEO DB pension plans grant the CEO annual compensation that is larger than predicted by economic determinants. We also find that more powerful CEOs, identified by their extraordinary pension benefits, receive higher total pay in addition to the pension benefits. We find no evidence that CEO pension benefits contribute to the pay-for-performance sensitivity of the annual pay.

Original languageEnglish (US)
Pages (from-to)779-800
Number of pages22
JournalEuropean Accounting Review
Volume24
Issue number4
DOIs
StatePublished - Oct 2 2015

ASJC Scopus subject areas

  • Accounting

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