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Executive Pensions

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  • Lucian A. Bebchuk
  • Robert J. Jackson, Jr.

Abstract

Because public firms are not required to disclose the monetary value of pension plans in their executive pay disclosures, financial economists have generally analyzed executive pay using figures that do not include the value of such pension plans. This paper presents evidence that omitting the value of pension benefits significantly undermines the accuracy of existing estimates of executive pay, its variability, and its sensitivity to performance companies. Studying the pension arrangements of CEOs of S&P 500, we find that the CEOs' plans had a median actuarial value of $15 million; that the ratio of the executives' pension value to the executives' total compensation (including both equity and non-equity pay) during their service as CEO had a median value of 34%; and that including pension values increased the median percentage of the executives' total compensation composed of salary-like payments during and after their service as CEO from 15% to 39%.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11907.

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Date of creation: Dec 2005
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Publication status: published as Bebchuk, Lucian and Robert Jackson. “Executive Pensions.” Journal of Corporation Law 30 (2005): 823-855.
Handle: RePEc:nbr:nberwo:11907

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Cited by:
  1. Carola Frydman & Raven S. Molloy, 2011. "Does Tax Policy Affect Executive Compensation? Evidence from Postwar Tax Reforms," NBER Working Papers 16812, National Bureau of Economic Research, Inc.
  2. Liu, Yixin & Mauer, David C. & Zhang, Yilei, 2014. "Firm cash holdings and CEO inside debt," Journal of Banking & Finance, Elsevier, Elsevier, vol. 42(C), pages 83-100.
  3. Engesaeth, E.J.P., 2011. "Managerial compensation contracting," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4807459, Tilburg University.
  4. Lila J. Truett & Dale B.Truett, . "Firm Size and Efficiency in the South African Motor Vehicle Industry," Working Papers, College of Business, University of Texas at San Antonio 0021, College of Business, University of Texas at San Antonio.
  5. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," Annual Review of Financial Economics, Annual Reviews, Annual Reviews, vol. 2(1), pages 75-102, December.
  6. Kabir, Rezaul & Li, Hao & Veld-Merkoulova, Yulia V., 2013. "Executive compensation and the cost of debt," Journal of Banking & Finance, Elsevier, Elsevier, vol. 37(8), pages 2893-2907.
  7. Balsam, Steven & Miharjo, Setiyono, 2007. "The effect of equity compensation on voluntary executive turnover," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 43(1), pages 95-119, March.
  8. Lucian Bebchuk, 2005. "The Growth of Executive Pay," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 21(2), pages 283-303, Summer.
  9. Colonnello, Stefano & Curatola, Giuliano & Ngoc Giang Hoang, 2014. "Executive compensation structure and credit spreads," SAFE Working Paper Series 60, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
  10. Sundaram, Rangarajan K. & Yermack, David, 2006. "Pay Me Later: Inside Debt and Its Role in Managerial Compensation," SIFR Research Report Series, Institute for Financial Research 43, Institute for Financial Research.
  11. Darko Tipuric & Danica Bakotic & Marina Lovrincevic, 2013. "Exploring The Link Between Executive Compensation Package And Executives' Pay Satisfaction In Croatian Companies: An Empirical Study," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), Economic Laboratory for Transition Research (ELIT), vol. 9(2), pages 7-16.

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