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Dynamic Incentive Accounts

Author

Listed:
  • Yuliy Sannikov

    (Princeton)

  • Xavier Gabaix

    (NYU)

  • Tomasz Sadzik

    (NYU)

  • Alex Edmans

    (Wharton)

Abstract

remainder in cash. The account features state-dependent rebalancing and time-dependent vesting. It is constantly rebalanced so that the equity fraction remains above a certain threshold; this threshold sensitivity is typically increasing over time even in the absence of career concerns. The account vests gradually both during the CEO's employment and after he quits, to deter short-termist actions before retirement.

Suggested Citation

  • Yuliy Sannikov & Xavier Gabaix & Tomasz Sadzik & Alex Edmans, 2010. "Dynamic Incentive Accounts," 2010 Meeting Papers 1207, Society for Economic Dynamics.
    • Handle: RePEc:red:sed010:1207
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Better incentives for CEOs, and mutual fund managers, too
      by Economic Logician in Economic Logic on 2009-10-14 19:11:00

    Citations

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    Cited by:

    1. Sylvain Chassang, 2013. "Calibrated Incentive Contracts," Econometrica, Econometric Society, vol. 81(5), pages 1935-1971, September.
    2. Alex Gershkov & Motty Perry, 2012. "Dynamic Contracts with Moral Hazard and Adverse Selection," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 268-306.
    3. Pierre Chaigneau, 2010. "The Optimal Timing of Executive Compensation," FMG Discussion Papers dp660, Financial Markets Group.
    4. LiCalzi, Marco & Pavan, Alessandro, 2005. "Tilting the supply schedule to enhance competition in uniform-price auctions," European Economic Review, Elsevier, vol. 49(1), pages 227-250, January.
    5. Alex Edmans & Xavier Gabaix, 2011. "Tractability in Incentive Contracting," The Review of Financial Studies, Society for Financial Studies, vol. 24(9), pages 2865-2894.
    6. Jacek Rothert, 2015. "Monitoring, moral hazard, and turnover," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(2), pages 355-374, February.
    7. Selena AURELI & Federica SALVATORI, 2012. "An Investigation on Possible Links between Risk Management, Performance Measurement and Reward Schemes," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 11(3), pages 306-334, September.
    8. Iulia JIANU & Ionel JIANU, 2012. "The Told and Retold Story of Romanian Accounting," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 11(3), pages 391-423, September.
    9. Kim, E. Han & Lu, Yao, 2011. "CEO ownership, external governance, and risk-taking," Journal of Financial Economics, Elsevier, vol. 102(2), pages 272-292.
    10. Daniel F. Garrett & Alessandro Pavan, 2012. "Managerial Turnover in a Changing World," Journal of Political Economy, University of Chicago Press, vol. 120(5), pages 879-925.
    11. He, Zhiguo, 2011. "A model of dynamic compensation and capital structure," Journal of Financial Economics, Elsevier, vol. 100(2), pages 351-366, May.
    12. Bhagat, Sanjai & Bolton, Brian, 2014. "Financial crisis and bank executive incentive compensation," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 313-341.
    13. George-Marios Angeletos & Alessandro Pavan, 2007. "Socially Optimal Coordination: Characterization and Policy Implications," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 585-593, 04-05.
    14. Jun Yang, 2010. "Timing of Effort and Reward: Three-Sided Moral Hazard in a Continuous-Time Model," Management Science, INFORMS, vol. 56(9), pages 1568-1583, September.
    15. Ingolf Dittmann & Ko-Chia Yu & Dan Zhang, 2017. "How Important Are Risk-Taking Incentives in Executive Compensation?," Review of Finance, European Finance Association, vol. 21(5), pages 1805-1846.
    16. Fangqing Zhang & Xiaolong Wu & Shujun Zhang, 2022. "Exploring the Continuous Motivation of Algorithm Engineers under Multiple Objectives: A Mixed-Methods Study," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    17. Giannetti, Mariassunta, 2011. "Serial CEO incentives and the structure of managerial contracts," Journal of Financial Intermediation, Elsevier, vol. 20(4), pages 633-662, October.

    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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