CEO Compensation and Performance of Banks



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Submitted Dec 29, 2021
Published Jan 22, 2022
10.24018/ejbmr.2022.7.1.1234

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The association between CEO compensation and bank profitability has drawn substantial attention in recent years. The study analyzes the relationship between CEO compensation and bank performance in Bangladesh for 2010-2020. The variables used in the study are return on equity, CEOs salary, bonus, housing facilities, housing allowance, and foreign trips. The study uses a 2SLS estimator to remove the possible endogeneity and create an unbiased result. The results strongly suggest that the CEOs' compensation package is positively and significantly related to the bank performance. A higher compensation package motivates the executives to perform well and reduces the agency problem.

Keywords: bank profitability, bank performance, CEO compensation

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