On directors’ compensation: a multilevel analysis of Spanish listed companies

Núñez, F., Arcos-Vargas, Á., Usabiaga, C., & Álvarez-de-Toledo, P. (2022). On directors’ compensation: a multilevel analysis of Spanish listed companies. Empirical Economics, 1-35.



This study analyzes the determinants of the annual compensation of directors belonging to the boards of the Spanish companies that constitute the IBEX 35 stock index. We investigate the importance of observed and unobserved heterogeneity in explaining director compensation. Based on a three-level mixed effect model, our analysis includes time-invariant random effects at company and manager level as determinants of director pay. We find that company effects explain 30% of the variation in director pay, while company and director effects taken together explain 77% of that variation. Our findings suggest that the characteristics of the company, in terms of activity sector, size and financial performance, and the professional attributes of the director (especially the role within the board), influence the compensation received. In addition, some directors and companies show random effects (either positive or negative) that significantly separate them from the expected compensation estimated from the fixed part of the model.

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