This paper investigates the determinants of executive compensation using the most recent data on firm performance, corporate governance and managerial compensation from a large sample of Indian firms. A linear regression model is used to develop explanations for total chief executive officer compensation and the proportion of incentive pay that forms a part of the CEO's compensation. It is found that firm size is a significant determinant of both these aspects of CEO compensation. The results also show that CEOs who are promoters of their firms earn significantly more than their ordinary counterparts. Such individuals also earn a much larger component of their compensation as incentive pay. In addition, this study also quantifies the significant divergences in compensation policies between private and public sector firms.
