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Executive Compensation: Facts

Author Info

  • Gian Luca Clementi
  • Thomas 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. 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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File URL: http://pages.stern.nyu.edu/~gclement/Papers/facts.pdf
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Paper provided by New York University, Leonard N. Stern School of Business, Department of Economics in its series Working Papers with number 09-16.

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Date of creation: 2009
Date of revision:
Handle: RePEc:ste:nystbu:09-16
Contact details of provider: Postal:
New York University, Leonard N. Stern School of Business, Department of Economics, 44 West 4th Street, New York, NY 10012-1126

Phone: (212) 998-0860
Fax: (212) 995-4218
Web page: http://w4.stern.nyu.edu/economics/

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Find related papers by JEL classification:
  • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
  • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
  • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

References listed on IDEAS
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  1. 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.
  2. Xavier Gabaix & Augustin Landier, 2006. "Why Has CEO Pay Increased So Much?," NBER Working Papers 12365, National Bureau of Economic Research, Inc.
  3. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," NBER Working Papers 16585, National Bureau of Economic Research, Inc.
  4. Brian J. Hall & Jeffrey B. Liebman, 1997. "Are CEOs Really Paid Like Bureaucrats?," NBER Working Papers 6213, National Bureau of Economic Research, Inc.
  5. 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.
  6. 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.
  7. 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.
  8. Lucian Bebchuk, 2005. "The Growth of Executive Pay," Oxford Review of Economic Policy, Oxford University Press, vol. 21(2), pages 283-303, Summer.
  9. Jensen, M.C. & Murphy, K.J., 1988. "Performance Pay And Top Management Incentives," Papers 88-04, Rochester, Business - Managerial Economics Research Center.
  10. 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.
  11. Peter F. Kostiuk, 1990. "Firm Size and Executive Compensation," Journal of Human Resources, University of Wisconsin Press, vol. 25(1), pages 90-105.
  12. 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.
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Cited by:

  1. CASTRO, Rui & CLEMENTI, Gian Luca & LEE, Yoonsoo, 2014. "Cross-sectoral variation in the volatility of plant-level idiosyncratic shocks," Cahiers de recherche 2014-09, Universite de Montreal, Departement de sciences economiques.
  2. 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.
  3. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Working Papers 0129, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Oct 2010.
  4. Rui Castro & Gian Luca Clementi & Yoonsoo Lee, 2010. "Cross-Sectoral Variation in Firm-Level Idiosyncratic Risk," Working Papers 10-18, New York University, Leonard N. Stern School of Business, Department of Economics.
  5. Thomas Cooley & Ramon Marimon & Vincenzo Quadrini, 2013. "Risky Investments with Limited Commitment," Working Papers 13-17, New York University, Leonard N. Stern School of Business, Department of Economics.
  6. Riachi, Ilham & Schwienbacher, Armin, 2013. "Securitization of corporate assets and executive compensation," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 235-251.
  7. 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.
  8. C, Loran & Eckbo, Espen & Lu, Ching-Chih, 2014. "Does Executive Compensation Reflect Default Risk?," UiS Working Papers in Economics and Finance 2014/11, University of Stavanger.

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