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The influence of comparative pay, customer service measures and accounting profits upon CEO pay in the UK privatised water industry

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  • Stuart Ogden
  • Robert Watson

Abstract

The paper investigates the influence of comparative CEO pay levels, customer service measures and accounting profits upon CEO pay in the UK privatised water industry over the period from 1992 to 2001. We argue that political and regulatory considerations can be expected to constrain CEO pay levels and to motivate remuneration committees to link CEO pay awards to simultaneous improvements in both profits and customer service improvements. The empirical results indicate that the most important drivers of CEO pay changes are sales growth and a partial adjustment to comparable UK CEO pay levels. Customer service improvements and accounting profits are also significantly related to CEO pay awards. However, consistent with regulatory incentives that mitigate the inherent financial conflicts between the two performance measures, the results suggest that the influence of customer service improvements upon CEO pay is largely indirect and stems from the impact it has upon the benchmark profit used for performance-related pay purposes.

Suggested Citation

  • Stuart Ogden & Robert Watson, 2007. "The influence of comparative pay, customer service measures and accounting profits upon CEO pay in the UK privatised water industry," Accounting and Business Research, Taylor & Francis Journals, vol. 37(3), pages 199-215.
    • Handle: RePEc:taf:acctbr:v:37:y:2007:i:3:p:199-215
    DOI: 10.1080/00014788.2007.9730072
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    Cited by:

    1. Ferhat D. Zengul & James D. Byrd & Nurettin Oner & Mark Edmonds & Arline Savage, 2019. "Exploring corporate governance research in accounting journals through latent semantic and topic analyses," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 26(4), pages 175-192, October.
    2. Reza, Rajibur & Tularam, Gurudeo Anand & Li, Bin, 2021. "A review of global research on private investment in the water sector," Utilities Policy, Elsevier, vol. 72(C).

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