CEO compensation, change, and corporate strategy

• 成果类型: Article
• 署名作者: Dow, J; Raposo, CC
• 署名单位: University of London; London Business School; Instituto Universitario de Lisboa
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2005.00814.x
• 发表日期: 2005
• 页码: 2701-2727
• 关键词: free cash flow; AGENCY COSTS; FIRMS; OWNERSHIP; gains

摘要

CEO compensation can influence the kinds of strategies that firms adopt. We argue that performance-related compensation creates an incentive to look for overly ambitious, hard to implement strategies. At a cost, shareholders can curb this tendency by precommitting to a regime of CEO overcompensation in highly changeable environments. Alternatively shareholders can commit to low CEO pay, although this requires a commitment mechanism (either by the board of the individual company, or by the society as a whole) to counter the incentive to renegotiate upwards. We study the conditions under which the different policies for CEO compensation are preferred by shareholders.