Examining pay–performance links: The role of capital owning and self-interest among board members in the high-tech industry

Abstract Board of directors (BOD) bring valuable human and relational capital to firms but may act as self-interested agents by design. The purpose of this study is to investigate how the compensation of BOD members in high-technology sectors affects overall firm performance. We tested our specific hypotheses using panel regression methodology on data gathered from the CRSP, Compustat, BoardEx, and ExecuComp databases. Our final sample consisted of 9,127 firm years, and the companies in our sample were all high-tech publicly traded U.S. firms from 1992 to 2019. Our results showed that there is an association between BOD’s pay structure and firm performance (accounting-based return on assets and market-based Tobin’s Q ). Our findings demonstrate originality and contribute to the literature since we empirically demonstrate that the level of variable BOD pay has a diminishing effect on return on assets and Tobin’s Q. This study advances our knowledge of executive compensation in the high technology sector.