Conference Paper

EXECUTIVE COMPENSATION GOVERNANCE AND NIGERIAN DEPOSIT MONEY BANKS’ FINANCIAL STABILITY

Executive compensation governance is a core mechanism for aligning managerial incentives with long-term stability, yet evidence from Nigeria remains inconclusive. This study examined the effect of executive compensation governance on the financial stability of listed Deposit Money Banks in Nigeria from 2015 to 2024. Using an ex-post facto research design, data were extracted from the annual reports of 10 purposively selected listed DMBs, yielding 100 bank-year observations. Financial stability was proxied by Return on Assets, Return on Equity, and Return on Capital Employed. Panel regression results showed that CEO compensation has no statistically significant effect on ROA but has a positive and statistically significant effect on ROE and ROCE. The findings imply that compensation governance in Nigerian DMBs enhances shareholder returns and capital efficiency, but does not improve asset utilization. The study concluded that aligning executive pay with measurable outcomes is crucial for sustainable profitability in Nigerian banks. Hence, performance-linked pay strengthens compensation governance and subsequently reduces bank instability and supports economic performance in Sub-Saharan Africa. It is therefore recommended that banks should design CEO pay in such a way that it is clearly tied to performance. When the salaries and bonuses of CEOs are linked to specific financial results such as profit levels, return on assets, and return on equity, it motivates them to work harder in achieving these goals. Keywords: Executive compensation governance, governance security, financial stability, deposit money banks