Three Essays on Executive Compensation - KOPS - Universität ...

Executive Compensation and Firm Performance in Germany
Table 1.7: Regression Results for Accounting Data,
2005-2009
Dependent Variable:
Total Compensation
EBIT 0.808*** 0.811*** 0.813***
(2.77) (2.74) (2.75)
EBIT x Rank(risk) -0.754** -0.756** -0.763**
(-2.21) (-2.20) (-2.22)
Rank(risk) 780.4 787.5 673.0
(1.49) (1.45) (1.03)
Stock Return -23.28 -23.44 -19.19
(-0.89) (-0.91) (-0.78)
2006 225.4*** 225.5*** 255.4**
(4.65) (4.65) (4.61)
2007 329.7*** 329.7*** 323.6***
(4.91) (4.91) (4.80)
2008 256.2*** 256.0*** 259.3***
(3.02) (3.01) (3.04)
2009 276.2*** 276.4*** 276.9***
(3.35) (3.31) (3.39)
CEO 583.5*** 582.9*** 585.6***
(3.33) (3.31) (3.33)
Total Assets - -0.0002 -
(-0.08)
Number of - - 0.002
Employees (0.74)
Observations 1,603 1,603 1,594
Pay-Performance Sensitivities
Median 0.432 0.433 0.432
Estimates are based on a panel regression with executive fixed
effects. Standard errors are heteroscedasticity-robust and adjusted
for clustering at the executive level. The dependent variable
is total compensation and measured in thousands of 2005
Euros. EBIT are total firm earnings before interest and taxes
in fiscal year t, measured in millions of 2005 Euros. Rank(risk)
is the rank of EBIT volatility divided by the number of observations.
Stock returns are annual returns adjusted for inflation.
CEO is a dummy variable for board members that are chief
executive officer of their firm. Total assets (in millions of 2005
Euros) and the number of employees are measured at the end
of the respective fiscal year. For each estimate t-values are
given in parentheses. Significance levels of 1, 5 and 10 percent
are indicated by ***, ** and *, respectively.
A Median Pay-Performance Sensitivity of 0.432 indicates that
an executive at the firm with median risk in our sample receives
roughly 432 Euro for generating 1 million Euro EBIT.
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