i-manager Publications

Determinants of CEO Pay - Evidence from Indian Pharmaceutical Sector

Sridhar Sambatur*, Dhananjaya Kadanda**, Swapna Rose***

* Department of Business Administration, St. Aloysius Institute of Management and Information Technology (AIMIT), Mangalore, India.

** Department of Management, St. Aloysius College (Autonomous), Mangalore, India.

*** Department of Management, St Aloysius Institute of Management and Information Technology (AIMIT), Mangalore, India.

Periodicity:December - February'2020
DOI : https://doi.org/10.26634/jmgt.14.3.16595

Abstract

Our study investigates the key determinants of Chief Executive Officer (CEO) gross pay in Indian pharmaceutical companies listed under BSE-S&P Healthcare index (Bombay Stock Exchange- Standard & Poor) using a longitudinal sample of 33 firms over 10-year period from 2008-09 to 2017-18. This amounts to 330 firm-years data. We probe the effect of firm performance, corporate governance, human capital, and tournament characteristics on the gross pay of CEOs. Profit after tax, Return on Assets, and Market Capitalization are found to be significant determinants of CEOs' total pay. Larger boards and companies having remuneration committees are found to be rewarding their CEOs with higher pay. Insidereffect on total pay is observed to be significant. CEO's lifetime experience has significant positive impact on the total pay. Gini's coefficient is below the alarming level of 0.5 for 93.8 per cent of firm-years indicating non-criticality of pay disparity between CEO and Key Managerial Personnel (KMP), in spite of large number of firms being led by promoter-directors.

Keywords

CEO Pay, Accounting Measures of Financial Performance, Market Capitalization, Board Size, Board Independence, Remuneration Committee, Human Capital Characteristics, Gini's Coefficient.

How to Cite this Article?

Sambatur, S., Kadanda, D., and Rose, S. (2020). Determinants of CEO Pay - Evidence from Indian Pharmaceutical Sector. i-manager's Journal on Management, 14(3), 32-46. https://doi.org/10.26634/jmgt.14.3.16595

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Determinants of CEO Pay - Evidence from Indian Pharmaceutical Sector

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