The Influence of Chief Executive Officer’s Compensation on Firms’ Performance in the Nigeria Banking Industry

Abstract

The study examines the influence of Chief Executive Officer’s (CEO) compensation on a firm’s performance. The objectives of the study were to determine if CEO compensation, firm size and leverage do significantly influence a firm’s performance. 10 banks quoted on the Nigerian Stock Exchange were sampled for easy accessibility of data. The least square regression technique was used to test the hypotheses of the study. Three hypotheses were tested and from the study, we summarize the following results; there is a significant relationship between CEO compensation and firm performance in the Nigerian banking industry. In addition, firm size does significantly influence firm performance in the Nigerian banking industry. In addition, there was a negative and insignificant relationship between leverage and firm performance in quoted companies in Nigeria. The study recommends that there should be proper compensation review as this will increase the productivity of the executives. Further, since increased pay is necessary for the efficiency of the workers, it is advised to ensure a considerable pay as this will ensure efficiency in the organization.