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Executive Compensation: Facts

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  • Gian Luca Clementi
  • Thomas F. Cooley

Abstract

In this paper we describe the important features of executive compensation in the US from 1993 to 2006. Some confirm what has been found for earlier periods and some are novel. Important facts about compensation are that: the compensation distribution is highly skewed; each year, a sizeable fraction of chief executives lose money; the use of equity grants has increased; the income accruing to CEOs from the sale of stock has increased; regardless of the measure we adopt, compensation responds strongly to innovations in shareholder wealth; measured as dollar changes in compensation, incentives have strengthened over time, measured as percentage changes in wealth, they have not changed in any appreciable way.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15426.

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Date of creation: Oct 2009
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Handle: RePEc:nbr:nberwo:15426

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  1. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," NBER Working Papers 16585, National Bureau of Economic Research, Inc.
  2. Wang, Cheng, 1997. "Incentives, CEO Compensation and Shareholder Wealth in a Dynamic Agency Model," Staff General Research Papers, Iowa State University, Department of Economics 5170, Iowa State University, Department of Economics.
  3. Xavier Gabaix & Augustin Landier, 2008. "Why Has CEO Pay Increased So Much?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(1), pages 49-100, 02.
  4. Brian J. Hall & Jeffrey B. Liebman, 1998. "Are CEOs Really Paid Like Bureaucrats?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(3), pages 653-691, August.
  5. Jensen, M.C. & Murphy, K.J., 1988. "Performance Pay And Top Management Incentives," Papers, Rochester, Business - Managerial Economics Research Center 88-04, Rochester, Business - Managerial Economics Research Center.
  6. 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.
  7. Gian Luca Clementi & Thomas Cooley & Chen Wang, 2004. "Stock Grants as a Committment Device," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 04-24, New York University, Leonard N. Stern School of Business, Department of Economics.
  8. Gerald Garvey & Todd Milbourn, 2003. "Incentive Compensation When Executives Can Hedge the Market: Evidence of Relative Performance Evaluation in the Cross Section," Journal of Finance, American Finance Association, American Finance Association, vol. 58(4), pages 1557-1582, 08.
  9. Wang, Cheng, 1997. "Incentives, CEO Compensation, and Shareholder Wealth in a Dynamic Agency Model," Journal of Economic Theory, Elsevier, Elsevier, vol. 76(1), pages 72-105, September.
  10. Scott Schaefer, 1998. "The Dependence Of Pay--Performance Sensitivity On The Size Of The Firm," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 436-443, August.
  11. Gian Luca Clementi & Thomas F. Cooley & Cheng Wang, . "Stock Grants as Commitment Device," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 2002-E12, Carnegie Mellon University, Tepper School of Business.
  12. Peter F. Kostiuk, 1990. "Firm Size and Executive Compensation," Journal of Human Resources, University of Wisconsin Press, vol. 25(1), pages 90-105.
  13. Cichello, Michael S., 2005. "The impact of firm size on pay-performance sensitivities," Journal of Corporate Finance, Elsevier, Elsevier, vol. 11(4), pages 609-627, September.
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Cited by:
  1. Cooley, Thomas F & Marimon, Ramon & Quadrini, Vincenzo, 2013. "Risky Investments with Limited Commitment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9725, C.E.P.R. Discussion Papers.
  2. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Working Papers 0038, University of Zurich, Center for Research in Sports Administration (CRSA), revised Oct 2010.
  3. Riachi, Ilham & Schwienbacher, Armin, 2013. "Securitization of corporate assets and executive compensation," Journal of Corporate Finance, Elsevier, Elsevier, vol. 21(C), pages 235-251.
  4. Acrey, James Cash & McCumber, William R. & Nguyen, Thu Hien T., 2011. "CEO incentives and bank risk," Journal of Economics and Business, Elsevier, Elsevier, vol. 63(5), pages 456-471, September.
  5. Andreas Kuhn, 2010. "The Public Perception and Normative Valuation of Executive Compensation: An International Comparison," NRN working papers, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria 2010-13, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.

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