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Executive Compensation: Facts

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Author Info

  • Gian Luca Clementi

    ()
    ( Department of Economics, Stern School of Business, New York University and RCEA)

  • Thomas Cooley

    ()
    ( Department of Economics, Stern School of Business, New York University and NBER)

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. Notable facts are that: the compensation distribution is highly skewed; each year, a sizeable fraction of chief executives lose money; the use of security grants has increased over time; the income accruing to CEOs from the sale of stock 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 The Rimini Centre for Economic Analysis in its series Working Paper Series with number 46_09.

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Date of creation: Jan 2009
Date of revision: Jan 2009
Handle: RePEc:rim:rimwps:46_09

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Related research

Keywords: CEO; Pay–Performance Sensitivity; Stock; Options;

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References

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  1. Peter F. Kostiuk, 1990. "Firm Size and Executive Compensation," Journal of Human Resources, University of Wisconsin Press, vol. 25(1), pages 90-105.
  2. Xavier Gabaix & Augustin Landier, 2006. "Why Has CEO Pay Increased So Much?," 2006 Meeting Papers 518, Society for Economic Dynamics.
  3. Lucian Bebchuk & Yaniv Grinstein, 2005. "The Growth of Executive Pay," NBER Working Papers 11443, National Bureau of Economic Research, Inc.
  4. Wang, Cheng, 1997. "Incentives, CEO Compensation and Shareholder Wealth in a Dynamic Agency Model," Staff General Research Papers 5170, Iowa State University, Department of Economics.
  5. Brian J. Hall & Jeffrey B. Liebman, 1997. "Are CEOs Really Paid Like Bureaucrats?," NBER Working Papers 6213, National Bureau of Economic Research, Inc.
  6. Wang, Cheng, 1997. "Incentives, CEO Compensation, and Shareholder Wealth in a Dynamic Agency Model," Journal of Economic Theory, Elsevier, vol. 76(1), pages 72-105, September.
  7. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," NBER Working Papers 16585, National Bureau of Economic Research, Inc.
  8. 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.
  9. Jensen, M.C. & Murphy, K.J., 1988. "Performance Pay And Top Management Incentives," Papers 88-04, Rochester, Business - Managerial Economics Research Center.
  10. Gian Luca Clementi & Thomas F. Cooley & Cheng Wang, . "Stock Grants as Commitment Device," GSIA Working Papers 2002-E12, Carnegie Mellon University, Tepper School of Business.
  11. Cichello, Michael S., 2005. "The impact of firm size on pay-performance sensitivities," Journal of Corporate Finance, Elsevier, vol. 11(4), pages 609-627, September.
  12. 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, vol. 58(4), pages 1557-1582, 08.
  13. Gian Luca Clementi & Thomas Cooley & Chen Wang, 2004. "Stock Grants as a Committment Device," Working Papers 04-24, New York University, Leonard N. Stern School of Business, Department of Economics.
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Cited by:
  1. Helmut Dietl & Tobias Duschl & Markus Lang, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Working Papers 1106, International Association of Sports Economists;North American Association of Sports Economists, revised Mar 2011.
  2. Acrey, James Cash & McCumber, William R. & Nguyen, Thu Hien T., 2011. "CEO incentives and bank risk," Journal of Economics and Business, Elsevier, vol. 63(5), pages 456-471, September.
  3. Thomas F. Cooley & Ramon Marimon & Vincenzo Quadrini, 2013. "Risky Investments with Limited Commitment," NBER Working Papers 19594, National Bureau of Economic Research, Inc.
  4. Riachi, Ilham & Schwienbacher, Armin, 2013. "Securitization of corporate assets and executive compensation," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 235-251.
  5. Andreas Kuhn, 2010. "The Public Perception and Normative Valuation of Executive Compensation: An International Comparison," NRN working papers 2010-13, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.

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