CEO PAY AND FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract This study investigates the impact of Chief Executive Officer (CEO) compensation on the financial performance of listed deposit money banks in Nigeria, specifically focusing on Net Interest Margin (NIM) and Tobin’s Q. Utilising regression analysis, the study examines whether variations in CEO pay influence these financial performance indicators. The findings reveal a statistically significant negative relationship between CEO Pay and NIM, with a beta coefficient of -0.0004677 (p-value = 0.02). This suggests that higher CEO Pay is associated with a decrease in NIM, contradicting the hypothesis that increased compensation would enhance financial performance. In contrast, no significant relationship was found between CEO Pay and Tobin’s Q, as indicated by a beta coefficient of -0.000131 (p-value = 0.71). This suggests that CEO Pay does not meaningfully affect Tobin’s Q. The results imply that while higher CEO Pay may negatively impact NIM, it does not significantly influence Tobin’s Q, suggesting a need for a reassessment of compensation structures to better align with financial performance objectives. The study recommends reevaluating compensation models to emphasize long-term performance and implementing more comprehensive performance-based incentives to improve overall financial outcomes.