Financial Crisis Compensation Aftershock: An Examination of the 2008 Financial Crisis on CEO Compensation Structure

This study examines CEO Compensation Structure and the 2008 Financial Crisis as a possible factor in determining the ratio of incentive based pay and base salary a CEO receives in annual compensation. The study focuses on the question of whether or not the 2008 Financial Crisis impacted the ratio of incentive based pay to base salary a CEO received prior to the 2008 Period and changed that ratio in the Post-2008 Period. The hypothesis that this study tests is that the 2008 Financial Crisis did have an impact on CEO compensation structure, and ultimately effect the ratio of incentive based pay to base salary that CEOs receive. Theory, regarding CEO compensation structure, is used to develop the study’s hypothesis and create a foundation for the research. Earlier studies conducted on compensation are reviewed to help construct a conceptual and operational model for the study. Finally, empirical testing is conducted in order to test the hypothesis