Indexing Executive Compensation Contracts

• 成果类型: Article
• 署名作者: Dittmann, Ingolf; Maug, Ernst; Spalt, Oliver G.
• 署名单位: Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam; University of Mannheim; Tilburg University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht052
• 发表日期: 2013
• 页码: 3182
• 关键词: relative performance evaluation; ceo compensation; managerial power; STOCK-OPTIONS; moral hazard; pay; incentives; INEFFICIENT; exercise; MARKET

摘要

We analyze the efficiency of indexing executive pay by calibrating the standard compensation model to a large sample of U.S. CEOs. The benefits from indexing the strike price of options are small, and fully indexing all options would increase compensation costs by 50% for most firms. Indexing has several effects with overall ambiguous outcome; the quantitatively most important effect is to reduce incentives, because indexed options pay off when CEOs' marginal utility is low. The results also hold if CEOs can extract rents and extend to the case of indexing shares. Our findings may justify the common practice of pay-for-luck..