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CEO share compensation, incentives, and business cycle: Some evidence from BHP Billiton

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  • Doojav, Gan-Ochir
  • Losol, Bayarmaa

Abstract

The paper argues that the CEO compensation policy of a mining company should consider the business cycle when evaluating the CEO’s performance of long-term incentive plan (LTIP). As an example, the case study of BHP Billiton supports the argument that the business cycle significantly affects the CEO compensation, specifically to LTIP remuneration. Therefore, the CEO compensation policy of a mining company should consider the business cycle when evaluating the CEO’s performance of LTIP. There should be a qualitative judgment to adjust the impact of the business cycle and to ensure that vesting of share options is not simply obtained from a formula that may give unexpected or unintended remuneration outcomes.

Suggested Citation

  • Doojav, Gan-Ochir & Losol, Bayarmaa, 2015. "CEO share compensation, incentives, and business cycle: Some evidence from BHP Billiton," MPRA Paper 107458, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107458
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    References listed on IDEAS

    as
    1. Mike Pottenger & Andrew Leigh, 2016. "Long-Run Trends in Australian Executive Remuneration: BHP, 1887–2012," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 56(1), pages 2-20, March.
    2. John E. Core & Wayne R. Guay & David F. Larcker, 2003. "Executive equity compensation and incentives: a survey," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 27-50.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate governance; CEO share compensation; incentives; business cycle;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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