Die Vergütung des Führungspersonals deutscher Großbanken, 1871–1913
Abstract:This paper describes and analyses level, structure, and development of executive remuneration of board members and deputy board members of large German joint-stock credit banks using principal-agent theory. Between 1871 and 1913, executives received an average real income of about 100,000 Mark. About 70 percent of it were profit shares. A profit increase by one percent increased the executive remuneration by about 1.2 percent. This strong incentive related pay might be seen as a solution to the principal-agent problem.
A statistical investigation shows that the starting level of executive remuneration positively depends on firm size. Furthermore, it shows that profit shares and risk costs of banks are negatively correlated. This suggests that incentive related pay improved the risk allocation in the banking sector.
Document Type: Research Article
Publication date: July 1, 2005
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