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Serial CEO incentives and the structure of managerial contracts

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  • Giannetti, Mariassunta

Abstract

I explore CEOs' incentives to select firm strategies and to acquire firm-specific skills when CEOs have job-hopping opportunities. Several features of managerial compensation, such as benchmarking of pay to larger and more prestigious companies, payments unrelated to past performance, unrestricted stock awards for highly paid CEOs, long-term incentives, and higher pay in companies granting long-term incentives, emerge in the optimal contract. I argue that the model can explain the change in the structure and the surge in US CEO compensation as well as differences across countries and across firms within a country.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Intermediation.

Volume (Year): 20 (2011)
Issue (Month): 4 (October)
Pages: 633-662

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Handle: RePEc:eee:jfinin:v:20:y:2011:i:4:p:633-662

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Web page: http://www.elsevier.com/locate/inca/622875

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Keywords: Optimal contracts Executive compensation Managerial labor market Firm-specific vs. general skills;

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References

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Cited by:
  1. Alessandra Bonfiglioli & Gino Gancia, . "Growth, Selection and Appropriate Contracts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  2. Michael L. Bognanno, 2010. "Executive Compensation: A Brief Review," DETU Working Papers 1002, Department of Economics, Temple University.
  3. Pierre Chaigneau, 2010. "The Optimal Timing of Executive Compensation," FMG Discussion Papers dp660, Financial Markets Group.
  4. Camelia M. Kuhnen & Andrea L. Eisfeldt, 2010. "CEO Turnover in a Competitive Assignment Framework," 2010 Meeting Papers 1081, Society for Economic Dynamics.
  5. Pierre Chaigneau, 2012. "The Optimal Timing of CEO Compensation," Cahiers de recherche 1207, CIRPEE.

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