Business, Management and Accounting
6 years ago

CEO pay tied to performance, governance key in Pakistan market

The role of corporate governance and dividend policy as an alignment mechanisms to CEO compensation and firm's performance
Farzan Yahya

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CEO compensation in Pakistan is linked to firm performance, size, and market share. Family owners tie pay to operating performance, institutional owners to market performance, and foreign investors to market share. Board size can strengthen the pay-performance link, while CEO duality and dividend policy may weaken it. Independent directors help align CEO pay with operating performance, but have less influence on other metrics. Dividend policy alone cannot control CEO compensation without strong corporate governance. This study suggests ways to improve corporate governance and compensation practices in Pakistan.