In particular, prior studies linking corporate governance to compensation practices have examined three broad categories
of governance constructs: (i) board of director characteristics; (ii) Board structure; and (iii) state antitakeover laws.
We obtain board of director data from the Equilar analysis of proxy statements and use six variables to capture board
characteristics: (i) the number of directors, (ii) the fraction of inside directors, (iii) the fraction of directors who are over
69 years old, (iv) the fraction of the board that is ‘‘busy’’ (which is measured as serving on at least two additional boards),
(v) an indicator that equals one if the lead director is classified as affiliated, and zero otherwise, and (vi) the fraction of
directors classified as outsiders who were appointed after the current CEO’s term began.