A large and increasing fraction of the value of executives' compensation is accounted for by security grants. It is often argued that the optimal compensation contracts characterized in the theoretical literature can be implemented by means of stock or option grants. However, in most cases the...

The empirical literature has pointed out several stylized facts about Executive Compensation Schemes. In particular, with respect to the sensitivity of compensation to shareholder wealth, three findings stand out. First, the short-run response of compensation to performance is lower than the one...