Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs
This paper examines year-on-year changes to the composition of performance peer groups used for Relative Performance Evaluation (RPE) in setting CEO pay in FTSE 100 companies and finds evidence of peer selection bias. We find that firms keep their peer groups weak by excluding relatively stronger pe...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Published: |
Wiley
2017
|
| Subjects: | |
| Online Access: | https://eprints.nottingham.ac.uk/38471/ |
| _version_ | 1848795619261415424 |
|---|---|
| author | Skovoroda, Rodion Bruce, Alistair |
| author_facet | Skovoroda, Rodion Bruce, Alistair |
| author_sort | Skovoroda, Rodion |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | This paper examines year-on-year changes to the composition of performance peer groups used for Relative Performance Evaluation (RPE) in setting CEO pay in FTSE 100 companies and finds evidence of peer selection bias. We find that firms keep their peer groups weak by excluding relatively stronger performing peers. We also show that peer selection bias is less pronounced in firms with higher institutional investor ownership, which suggests that institutional investors might be aware of the risks of peer selection bias. The results suggest that peer group modifications can be viewed, at least in part, as an expression of managerial rent-seeking. |
| first_indexed | 2025-11-14T19:34:58Z |
| format | Article |
| id | nottingham-38471 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:34:58Z |
| publishDate | 2017 |
| publisher | Wiley |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-384712020-05-04T19:58:11Z https://eprints.nottingham.ac.uk/38471/ Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs Skovoroda, Rodion Bruce, Alistair This paper examines year-on-year changes to the composition of performance peer groups used for Relative Performance Evaluation (RPE) in setting CEO pay in FTSE 100 companies and finds evidence of peer selection bias. We find that firms keep their peer groups weak by excluding relatively stronger performing peers. We also show that peer selection bias is less pronounced in firms with higher institutional investor ownership, which suggests that institutional investors might be aware of the risks of peer selection bias. The results suggest that peer group modifications can be viewed, at least in part, as an expression of managerial rent-seeking. Wiley 2017-04 Article PeerReviewed Skovoroda, Rodion and Bruce, Alistair (2017) Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs. British Journal of Management, 28 (2). pp. 265-279. ISSN 1467-8551 Corporate Governance Executive Compensation Performance Peer Groups http://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12209/abstract doi:10.1111/1467-8551.12209 doi:10.1111/1467-8551.12209 |
| spellingShingle | Corporate Governance Executive Compensation Performance Peer Groups Skovoroda, Rodion Bruce, Alistair Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs |
| title | Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs |
| title_full | Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs |
| title_fullStr | Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs |
| title_full_unstemmed | Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs |
| title_short | Shifting the goalposts? Analysing changes to performance peer groups used to determine the remuneration of FTSE100 CEOs |
| title_sort | shifting the goalposts? analysing changes to performance peer groups used to determine the remuneration of ftse100 ceos |
| topic | Corporate Governance Executive Compensation Performance Peer Groups |
| url | https://eprints.nottingham.ac.uk/38471/ https://eprints.nottingham.ac.uk/38471/ https://eprints.nottingham.ac.uk/38471/ |