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| Author: | Comprix, J. Muller, K.A. III |
| Title: | Asymmetric treatment of reported pension expense and income amounts in CEO cash compensation calculations |
| Journal: | Journal of Accounting & Economics
2006 : DEC, VOL. 42:3, p. 385-416 |
| Index terms: | managers executive remuneration compensation pay earnings pensions rate of return |
| Language: | eng |
| Abstract: | This paper provides evidence that CEO cash compensation (hereafter as: cmp.) is relatively less sensitive to pension (here as: pns.) expense than pns. income, suggesting that cmp. committees (as: comms.) shield CEO cash cmp. from pns. expense amounts. Evidence is also provided that managers use relatively higher expected rate of return estimates when reporting pns. income, suggesting that managers select income-increasing accounting estimates in response to cmp. comms.' greater emphasis on pns. income in CEO cash cmp. determinations. Pns. cost amounts represent a unique setting to examine such behaviour as their effect on CEO cash cmp. can be beneficial or detrimental, yet arising from the same underlying economic activity. |
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