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

Executive Compensation and Firm Performance in Germany
Table 1.11: Sub-period Analysis for Total and Short-Term Compensation
and Accounting Data
Total
Cash Bonuses
2005-2007 2008-2009 2005-2007 2008-2009
EBIT 1.77** 2.81*** 1.22*** 2.31***
(2.35) (3.99) (3.03) (3.83)
EBIT x Rank(risk) -1.66** -2.77*** -1.15** -2.35***
(-2.18) (-3.63) (-2.85) (-3.82)
Rank(risk) 1,889*** 1,225*** 766.7*** 280.6***
(5.32) (5.83) (3.65) (2.61)
Stock return -5.72 17.80 -31.75 -19.13
(-0.06) (0.50) (-0.58) (-0.66)
2006 80.41 - -47.79 -
(0.87) (-0.54)
2007 83.80 - -0.26 -
(0.60) (-0.00)
2009 - -16.72 - 46.50
(-0.26) (0.72)
CEO 849.1*** 662.6*** 388.26*** 308.1***
(4.78) (6.38) (4.54) (4.88)
Total Assets -0.0004 0.01*** -0.001 0.006***
(-0.22) (2.63) (-1.36) (5.18)
Observations 812 786 812 786
Pay-Performance Sensitivities
Median 0.945 1.419 0.648 1.140
Estimates are based on a panel regression with industry fixed effects. Standard
errors are heteroscedasticity-robust and adjusted for clustering at the industry
level. The dependent variables are different compensation components in thousands
of 2005 Euros and are given in the first line of the table. EBIT are total
firm earnings before interest and taxes in fiscal year t. Rank(risk) is the rank of
EBIT volatility divided by the number of observations. CEO is a dummy variable
for board members that are chief executive officer of their firm. Total Assets 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 0.945 indicates that an executive at the
firm with median risk in our sample receives roughly 945 Euro for generating 1
million Euro EBIT.
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