CEO Personal Reputation: does it Affect Remuneration During Times of Economic Turbulence?

Abstract The primary focus of this study is to provide evidence on whether, during a period of economic turbulence, the personal reputation of CEOs holds up as a significant determinant of their remuneration, or whether the company's financial performance and governance structures are the more dominant determinants of CEOs’ remuneration. Using secondary data sampled from Australian Top 200 listed companies over a 3 year period straddling the global financial crisis, this study models determinants of total CEO remuneration. The results reveal that CEOs’ personal reputation does have a positive significant effect on total remuneration. Of the company financial performance influences on CEO remuneration, volatility of ROE and the net operating cash flow are found to have the most significant effects on total CEO remuneration, as expected during the period of economic turbulence studied. Governance structures of remuneration committee independence and the extent of substantial shareholdings were found to not have significant effect on total CEO remuneration.