CEO Compensation

This paper surveys the recent literature on CEO compensation. The rapid rise in CEO pay over the past 30 years has sparked an intense debate about the nature of the pay-setting process. Many view the high level of CEO compensation as the result of powerful managers setting their own pay. Others interpret high pay as the result of optimal contracting in a competitive market for managerial talent. We describe and discuss the empirical evidence on the evolution of CEO pay and on the relationship between pay and firm performance since the 1930s. Our review suggests that both managerial power and competitive market forces are important determinants of CEO pay, but that neither approach is fully consistent with the available evidence. We briefly discuss promising directions for future research.

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Year of publication:	2010
Authors:	Frydman, Carola ; Jenter, Dirk
Institutions:	CESifo
Subject:	executive compensation \| managerial incentives \| incentive compensation \| equity compensation \| option compensation \| corporate governance

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Extent:	application/pdf
Series:	CESifo Working Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 3277
Classification:	D20 - Production and Organizations. General ; G30 - Corporate Finance and Governance. General ; J30 - Wages, Compensation, and Labor Costs. General ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc ; J33 - Compensation Packages; Payment Methods ; J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008799732