Predicting CEO Compensation in Non-Controlled Public Corporations with the Canonical Regression Quantile Method

Abstract

The use of the Canonical Regression Quantiles Index proved that non-controlled companies that engage in long-term operational and financial goals post superior future performance. The Index indicates that current CEO compensation influences future performance. The Index provides a method for determining CEO pay for the next 1-2 year and is a useful method to distinguish over/underpaid CEOs as an unbiased alternative to the peer groups comparison used by most compensation consultants. This determination is statistically weak, but future research using the Canonical Regression Quantiles with a larger data set may lead to increased sensitivity and a powerful unbiased method for replacing compensation consultants who are responsible for the decoupling of CEO compensation and corporate performance.