Relative compensation and CEO turnover.

This paper investigates if and how CEO compensation relative to the size and industry adjusted peer groups is related to forced CEO turnover. Results indicate that CEO compensation relative to the peer groups is positively related to forced CEO turnover. Further results show that CEOs who receive higher-than-median compensation also face higher likelihood of forced turnover, increased sensitivity of turnover to firm performance and increased sensitivity of turnover to corporate governance. These relations are not significant for CEOs who receive lower-than-median compensation. Overall, results indicate that CEO compensation relative to a peer group does not represent CEO power or influence. Rather it reflects a reward or premium for CEO talent and expected performance