CEO Pay and Financial Performance: Evidence from Deposit Money Banks in Nigeria

Abstract

The study is on the relationship between CEO pay and financial performance of banks in Nigeria 
from 2008 to 2022. In establishing the relationship, correlational research design was implored. 
The study aimed to investigate the impact of CEO Pay on Financial Performance of DMBs in 
Nigeria. The research encompasses listed banks in Nigerian. Utilizing secondary data from annual 
reports and accounts, a panel regression using feasible generalised least square FGLS was used to 
test the hypotheses due to presence of heteroskedasticity since Hausman and Lagrange Multiplier 
test choose random effect. The study was anchored on pay performance theory on the two models 
of financial performance which include NIM and Tobin’s Q. The findings reveal that CEO 
compensation have a negative and significant relationship with financial performance of banks in 
Nigeria. However, the study could not establish any relationship between chairman compensation 
and financial performance. The study's findings yield recommendations for enhancing financial 
performance of Nigerian banks. The study recommends s need for control on CEO Pay of banks 
as these are vital to the financial performance of banks in Nigeria.