CEO compensation and operational risk

Research output: Contribution to journalArticle

Abstract

This study examines the impact of operational risk on CEO compensation in the property-liability insurance industry. We find that property-liability CEOs are not penalised for operational risk in terms of cash-based compensation, while they are penalised in terms of their option-based compensation. Our findings also suggest that CEOs are largely insulated from firm level operational losses in terms of their total compensation. These findings have implications for implementing optimal risk-based contracting decisions for CEO compensation contracts.

Original languageEnglish
Pages (from-to)407-424
Number of pages18
JournalInternational Journal of Business Innovation and Research
Volume12
Issue number4
DOIs
Publication statusPublished - 2017

Keywords

  • CEO compensation
  • Corporate governance
  • Insurance
  • Operational risk

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation

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