CEO Characteristics and the Decision to Include Non-Financial Performance Measures in Compensation Contracts

Abstract

This study examines how CEO characteristics influence the decision to use non-financial performance measures (NFPM) in compensation contracts. Using logistic and OLS regression methods, we examine the CEO characteristics: gender, age, and tenure. We provide limited evidence that female CEOs are positively associated with the use of NFPM and CEO tenure is negatively associated. We also document descriptive information indicating industries that are more likely to use NFPM, and the most common types of NFPM employed. The results of this study further the understanding for the use of NFPM and provide information regarding specific managerial characteristics that influence CEO compensation decisions