Benchmarking of Pay Components in CEO Compensation Design

Benchmarking of Pay Components in CEO Compensation Design

Yaniv Grinstein, Beni Lauterbach, Revital Yosef

Series number :

Serial Number: 

Date posted :

June 28 2021

Last revised :

February 14 2023
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  • Benchmarking • 
  • CEO compensation • 
  • peer group • 
  • pay mix • 
  • pay components

We document an important element of CEO compensation design – benchmarking of the pay components.

Analyzing a panel of CEO compensation data entailing 1,451 S&P 1500 firms during 2006-2019, we find that: 1) Component-of-pay benchmarking more effectively explains CEO compensation design than does total compensation benchmarking; 2) Most pay components exhibit similar benchmarking behavior; the only exception is the milder adjustment of salary to that of peers; 3) Benchmarking of the weight of each component in total compensation is also apparent. Our results suggest that benchmarking of pay components is an economically fundamental part of CEO compensation design.

Published in

Published in: 
Journal of Corporate Finance, Forthcoming


Real name:
Revital Yosef