Independent and executive directors and their effect on CEO compensation.

Abstract

The purpose of this paper is to analyze how the proportion of independent and executive directors of the boards affects the remuneration of the CEO of companies listed on the Madrid Stock Exchange. As control variables that could influence the remuneration have been considered the size of the company, the size of the Board of Directors, whether the CEO and the chairman of the board are the same person or not, the level of indebtedness and economic profitability. The results obtained show that the percentage of independent directors are not statistically significant, therefore, they do not influence the remuneration of the CEO. On the contrary to the percentage of executive directors who are significant and will influence positively. It should be noted that the size of the board and the fact that the CEO and chairman of the board are the same person are positively associated with CEO remuneration, these variables are statistically significant.