Are CEOs paid their value added?

Posted: November 29, 2011 | Author: Daniel J. Smith | Filed under: CEO Pay, Executive Pay, Uncategorized | Leave a comment »

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Are CEOs paid their value added?

Golden Parachutes, Shark Repellents, and Hostile Tender Offers

Posted: June 29, 2011 | Author: Daniel J. Smith | Filed under: Executive Pay, Golden Parachute | Leave a comment »

Golden Parachutes, Shark Repellents, and Hostile Tender Offers
Author(s): Charles R. Knoeber
Source: The American Economic Review, Vol. 76, No. 1 (Mar., 1986), pp. 155-167

http://www.jstor.org.mutex.gmu.edu/stable/pdfplus/1804133.pdf

CEO Compensation — by Carola Frydman, Dirk Jenter

Posted: December 6, 2010 | Author: Daniel J. Smith | Filed under: CEO Pay, Executive Pay, Uncategorized | Leave a comment »

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CEO Compensation — by Carola Frydman, Dirk Jenter

This paper surveys the recent literature on CEO compensation. The rapid rise in CEO pay over the past 30 years has sparked an intense debate about the nature of the pay-setting process. Many view the high level of CEO compensation as the result of powerful managers setting their own pay. Others interpret high pay as the result of optimal contracting in a competitive market for managerial talent. We describe and discuss the empirical evidence on the evolution of CEO pay and on the relationship between pay and firm performance since the 1930s. Our review suggests that both managerial power and competitive market forces are important determinants of CEO pay, but that neither approach is fully consistent with the available evidence. We briefly discuss promising directions for future research.

Performance Pay and Top-Management Incentives

Posted: February 10, 2010 | Author: Daniel J. Smith | Filed under: Executive Pay | Leave a comment »

http://docs.google.com/viewer?url=http://www.stockoptions.org.il/Admin/App_Upload/Performance%2520Pay%2520and%2520Top-Management%2520Incentives.pdf

Abstract:

Our estimates of the pay-performance relation (including pay, options,

stockholdings, and dismissal) for chief executive officers indicate CEO

wealth changes $3.25 for every $1,000 change in shareholder wealth.

Although the incentives generated by stock ownership are large relative

to pay and dismissal incentives, most CEOs hold trivial fractions of

their firm’s stock and ownership levels have declined over the past 50

years. We hypothesize that public and private political forces impose

constraints that reduce the pay-performance sensitivity. Declines in

both the pay-performance relation and the level of CEO pay since the

1930s are consistent with this hypothesis.

Another Rational Reason for Executive Pay

Posted: January 4, 2010 | Author: Daniel J. Smith | Filed under: Executive Pay | Leave a comment »

“For example, the large salaries of executives may provide incentives for everyone in the firm who, with hard labor, may win one of the coveted positions.”

Rank-Order Tournaments as Optimum Labor Contracts by Lazear and Rosen: http://www.nber.org/papers/w0401

Other Research on Executive Pay:

Executive Compensation by Kevin Murphy: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=163914

Executive Compensation Structure, Ownership and Firm Production: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VBX-3YN9DCD-D&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=1153880673&_rerunOrigin=scholar.google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=ea2344182433c3510876c4f9060f5acf