Information Systems Research, 1998, Volume 9,
Issue 4, Page 398-414.
In this paper we study the compensation determinants for CEO[subs] in the computer industry and compare these findings with a large sample of firms from other manufacturing and service industries. We examine whether superior performance is rewarded by higher levels of compensation and find cash-based compensation, such as salary and bonus, is influenced by performance. Depending on the growth prospects of the company, pay is tied either to accounting measures of performance or to stock return. In contrast, stock-based compensation, such as options and restricted stock awards, is not reflective of performance but depends upon the firm's growth. Two other interesting findings are that the prevalent use of stock-based compensation in the computer industry does not appear to be the result of computer firms being "cash starved." In addition, stock-based compensation does not appear to lead to larger executive stock ownership, as is widely believed.
Keywords: Executive Compensation;Pay-for-Performance;Cash-Based Compensation;Stock-Based Compensation;Stock Options