Executive compensation and firm performance: An empirical investigation

The purpose of this study was to address the relationship of management entrenchment factors as they relate to CEO tenure, CEO age, CEO percent of stock ownership, CEO education, and Chairman of the Board, and their effect on compensation and firm performance.; This research sample was first drawn from a population of the very best companies listed as Fortune 500 companies. The firm's CEO was listed as one of the 800 Top Paid CEOs. The firm was listed as one of the top twenty fastest-growing industries (1994--1999). This study limit itself only to the firms that have figures available for five years or more.; The following ten research questions have been prepared to study and explore the effect that management entrenchment factors have on compensation and firm performance: (1) Is there a relationship between CEO tenure and CEO compensation? (2) Is there a relationship between CEO age and CEO compensation? (3) Is there a relationship between CEO percent stock ownership and CEO compensation? (4) Is there a relationship between CEO education and CEO compensation? (5) Is there a relationship between Chairman of Board and compensation? (6) Is there a relationship between CEO tenure and firm performance? (7) Is there a relationship between CEO age and firm performance? (8) Is there a relationship between CEO percent of stock ownership and firm performance? (9) Is there a relationship between CEO education and firm performance? (10) Is there a relationship between Chairman of the Board and firm performance?; The study failed to reject the null hypothesis for the relationship between management entrenchment factors: CEO tenure, CEO age, CEO percent of stock ownership, CEO education, and Chairman of the Board and compensation. The study also failed to reject the null for the relationship between management entrenchment factors CEO tenure, CEO age, CEO percent of stock ownership, CEO education, and Chairman of the Board and firm performance.