The Determinants of CEO Compensation in the U.S. General Merchandise Sector

Abstract

The purpose of this study is to examine the relationships between CEO compensation and firm level performance in the U.S. General Retail Store Sector. We performed cross sectional regressions on the entire sample and found no significant relationship existed between the level of CEO compensation and a set of independent variables that proxy for firm performance. We then performed a Stepwise regression and found that Market Capitalization and Gross Margin were significantly related to the level of CEO compensation and a set of independent variables that proxy firm performance. Our findings suggest that CEO compensation is positively related to market capitalization and gross profit margin.