How Much Does Performance Matter? A Meta-Analysis of CEO Pay Studies

Through a meta-analytic review of the empirical literature on the determinants of CEO pay, this study tests the hypothesized relationships between firm size, performance, and CEO pay. We show that firm size accounts for more than 40% of the variance in total CEO pay, while firm performance accounts for less than 5% of the variance. We also show that pay sensitivities are relatively similar for both changes in size (5% of the explained variance...