Agency Delayed Compensation, and the Structure of Executive Remuneration
In this paper we examine the factors affecting the structure of executivesâ€˜ compensation packages. We focus particularly on the role of various types of delayed compensation as means of "bonding" executives to their firms. The basic problem is to design a compensation package that rewards actions that are in the 1ongâ€”run interest of the stockholders. Firms must take into account (1) their ability to discern unfortunate circumstances from mismanagement; (2) the extent to which a compensation package forces the executive to face risks beyond his control; and (3) the willingness of a given executive to bear this risk. we use our theory to interpret some executive compensation data from the early 1970's.
|Date of creation:||Sep 1982|
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- Wilbur G. Lewellen, 1968. "Executive Compensation in Large Industrial Corporations," NBER Books, National Bureau of Economic Research, Inc, number lewe68-1, September.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Masson, Robert Tempest, 1971. "Executive Motivations, Earnings, and Consequent Equity Performance," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1278-92, Nov.-Dec..
- Goldberg, Victor P., 1980. "Bridges over contested terrain : Exploring the radical account of the employment relationship," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 249-274, September.
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