This paper explores five interpretations of “pay for performance”, presents a practical way to measure pay for performance and shows the extent of pay for performance at S&P 1500 companies. The paper argues that pay for performance has three dimensions: the sensitivity of relative pay to...

This paper uses historical data on relative pay and relative performance to quantify three dimensions of pay for performance: pay leverage (a measure of incentive strength), pay alignment (a measure of correlation) and the pay premium at peer group average performance (a measure of performance...

Most companies rely heavily on earnings to measure operating performance, but earnings growth has at least two important weaknesses as a proxy for investor wealth. Current earnings can come at the expense of future earnings through, for example, short‐sighted cutbacks in investment, including...