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Equity has become a dominant component of CEO compensation in the past three decades due to its ability to align the interests of managers and shareholders. Each year, a firm can award its CEO either a certain number (share-based) or …
Executive compensation and corporate taxation are both hot button issues, but can they be related? In a recent paper, we examine how CEO bonus contracts reinforce global tax incentives and show that executive pay practices helped drive corporate activity …
Stock prices affect various corporate decisions such as the amount of CEO compensation, as emphasized in traditional pay-for-performance studies, and capital investment. However, an unanswered question is whether changes in firms’ stock price in a short window around events related …
Our paper utilizes National Collegiate Athletic Association (NCAA) Football Bowl Subdivision (FBS) coaching contracts as a managerial setting to examine whether higher top-managerial pay (our Gridiron CEOs) is associated with better team performance. Coaching contracts are quite compelling as they …
Members of the academic community, the business world, and law firms have long been debating shareholder primacy, stakeholder governance, and corporate purpose. In a forthcoming essay, I outline these arguments but suggest that reform of corporate governance should be focused …
Defined-benefit pension plans and deferred compensation are often sizable and important components of CEO pay packages. In recent years, though, they have prompted controversy among investors, policymakers, and academics. On the one hand, CEO pension and deferred compensation are unsecured …
CEO compensation typically consists of cash and long-term equity. While the benefits of cash are to some extent fixed, the value of equity-based compensation depends on the market value of the firm. The latter is the key mechanism for motivating …
The growing compensation gap between CEOs and rank-and-file employees has generated considerable debate about potential adverse consequences at both the firm and societal levels. Despite interest in the topic, assessing vertical pay disparity has been difficult due to the lack …
The replacement of a CEO is one of the most important responsibilities of corporate boards. The most common theoretical underpinning of CEO replacement is related to CEO ability: The corporate board learns about the ability of its CEO from firm …
Many managers receive company stock as compensation and then pledge that stock as collateral for personal loans. The practice is increasingly common, and its potential economic impact is anything but negligible. For example, Larcker and Tayan (2010) document that pledged …
Gender diversity on boards is a leading issue in corporate governance, as has been made clear by anecdotal evidence that associates board gender diversity with better boardroom practices (e.g., Credit Suisse Research Institute, 2016 [1]; Morgan Stanley Research, 2018 [2]) …
Compensation disclosures have grown significantly over the last decade (mostly for the better), and they continue to evolve with the ongoing engagement between companies and shareholders. Certain compensation practices are known for raising investor concerns, leading to difficult conversations between …
How much compensation does a CEO really end up with? It’s a tough question to answer – the summary compensation table is often cited as what the CEO is paid, but the ultimate value that an executive realized from those …
Performance-based long-term executive compensation is generally determined by a company’s achievements over three-year measurement periods. Total Shareholder Return (TSR), however, doesn’t always accurately reflect the performance of a company or management team during that period. Macroeconomic factors, tax policy, financial …
Executive compensation elicits strong opinions from shareholders, practitioners, and the public alike. Ideally, compensation packages should be designed to attract, retain, and motivate executives to perform in accordance with the objectives of their companies’ shareholders. This idea is consistent with …
Innovation is the primary engine of growth in economies at the technological frontier, and a path to higher profits and growth for individual companies, as the likes of Apple, Alphabet, Microsoft, and Amazon make clear. CEOs play a crucial role …
Since the financial crisis, much of the business media have focused on the level of CEO compensation and how much it increases from the prior year, often calling out the CEOs with the highest pay. These articles in the New …
Much of the discourse on income inequality between ordinary workers and top executives concentrates on a ratio of chief executive officer (CEO) compensation to average employee compensation. The business strategy, organizational structure, and size of a firm can influence the …