We investigate simultaneously the impact of promotion-based tournament incentives for VPs and equity-based (alignment) incentives for VPs and the chief executive officer (CEO) on firm performance. We find that tournament incentives, as measured by the pay differential between the CEO and VPs,...

This paper considers optimal compensation for a CEO who is entrusted with administering corporate assets honestly. Optimal compensation designs maximize integrity at minimum cost. These designs are very “low powered,” i.e., while specifying a lower bound for performance and increasing pay...

Agents frequently compete for both relative-performance rewards — mutual fund inflows generated by rankings, executive promotions and compensation based on peer comparisons, rank-dependent social status — and absolute-performance rewards — bonus payments for meeting targets, performance...