Are we paying our

CEO remuneration is always a headline issue. ZOLTAN MATOLCSY and ANNA WRIGHT go beyond the headlines to ~etermine the relationship between CEO remuneration and the economic characteristics of the firm. The level of CEO compensation and the link between CEO compensation and firm performance has been extensively questioned by investors, politicians and the media in recent times. Much of the debate concentrates on the levels of compensation awarded to the CEO, and expresses cynicism in whether the level of CEO compensation is related to increases in firm performance. For example, Allan Fels wrote in The Australian Financial Review, "CEO compensation levels are growing at a rate out of step with the value they are actually providing to their employers, the shareholders. Millions of dollars of shareholders ' funds are being wasted". 1 However, such opinion pieces provide little or no evidence to support their arguments, but despite this, there has been very little investigation by the academic community into the determinants of the levels of Australian CEO compensation, with only limited evidence provided by Chalmers, Ko