This paper contributes to the corporate governance literature by focusing on how Chief Executive Officer (“CEO”) duality and compensation committee quality are related to CEO compensation in the period since passage of the Sarbanes Oxley Act (“SOX”). Unlike research prior to SOX that focused chiefly on committee members’ independence, we measure compensation committee quality in two ways. We consider the average number of board directorships held by compensation committee members as well as the proportion of committee members with prior or current CEO duality experience. We introduce the latter variable as a new measure of quality as it has not been utilized in research conducted prior to or since the passage of SOX. Using a sample of 100 2007 Fortune 500 firms, we find that CEO duality does not have a significant effect on CEO compensation. However, we document a positive relationship between average number of directorships and CEO compensation and also find evidence that CEO duality moderates the relationship between our measures of compensation committee quality and CEO compensation.
Harris, Cindy K.; Cirka, Carol C.; and Farris, Eric, "The Power of One: Effects of CEO Duality on Compensation Committee Quality and CEO Compensation" (2012). Business and Economics Faculty Publications. 30.