Performance Pay And Top Management Incentives
AbstractThe authors' estimates of the pay-performance relation (including pay, options, stockholding, and dismissal) for chief executive officers indicate that CEO wealth changes $3.25 for every $1,000 changes in shareholder wealth. Although the incentives generated by stock ownership are large relative to pay and dismissal incentives, most CEOs hold trivial fractions of the firms' stock, and ownership levels have declined over the past fifty years. The authors 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. Copyright 1990 by University of Chicago Press.
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Bibliographic InfoPaper provided by Rochester, Business - Managerial Economics Research Center in its series Papers with number 88-04.
Length: 47 pages
Date of creation: 1988
Date of revision:
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Postal: UNIVERSITY OF ROCHESTER, MANAGERIAL ECONOMICS RESEARCH CENTER, WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION, ROCHESTER NEW YORK 14627 U.S.A
Web page: http://www.simon.rochester.edu/
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efficiency ; wage incentives ; management;
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