Pay-for-performance?: An Empirical Investigation of the Relationship between Executive Compensation and Firm Performance in the Netherlands

textabstractExecutive Summary This paper investigates the relationship between CEO compensation and company performance for Dutch listed companies for the period 2002-2007. The study examines if absolute or relative changes in CEO pay are related to changes in company performance. Furthermore, the study investigates if the pay-performance relationship has strengthened after the introduction of the Dutch corporate governance code in 2004. The results suggest that the Dutch corporate governance code had a positive effect on the pay-performance relationship. This effect is mainly driven by the increased use of equity-based compensation. Compared internationally, the pay-performance relationship in the Netherlands remains relatively low