The influence of the remuneration committee characteristics on CEO pays levels and structure
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Abstract
This study examines the impact of remuneration committee chair (RCC) characteristics on CEO compensation levels and structures in U.K. listed firms over the period 2010–2022. Drawing on agency and corporate governance theories, the research investigates whether the individual attributes of RCCs, such as gender diversity, tenure, professional experience, inter-committee engagement, and external commitments, influence the design and effectiveness of executive pay packages. Using panel data regression analysis, the results reveal that high-quality RCCs are associated with lower CEO compensation levels and more performance-based pay structures, thereby reducing rent extraction opportunities. Specifically, gender-diverse and experienced chairs, with balanced tenure and moderate committee overlap, enhance monitoring quality and promote compensation schemes better aligned with shareholder interests. Conversely, excessive external directorships and network centrality appear to weaken oversight capacity and contribute to inflated pay.
The findings extend the existing literature by shifting the analytical focus from board-level characteristics to the individual-level traits of key governance actors responsible for executive pay decisions. The study also provides practical and policy implications for corporate governance reform, highlighting that gender diversity, experience, and workload balance among remuneration committee chairs are essential for improving the effectiveness of executive compensation governance. Overall, this research highlights the importance of committee leadership quality as a determinant of equitable and performance-aligned CEO remuneration.