Dittmann, Ingolf; Maug, Ernst; Spalt, Oliver G. - In: Review of Financial Studies 26 (2013) 12, pp. 3182-3224
We analyze the efficiency of indexing executive pay by calibrating the standard compensation model to a large sample of U.S. CEOs. The benefits from indexing the strike price of options are small, and fully indexing all options would increase compensation costs by 50% for most firms. Indexing...