. We derive the optimal compensation contracts for managers and demonstrate that the use of high-powered incentives will be … limited by the need to soften product market competition. In particular, when managers can be compensated based on their own …

result of powerful managers setting their own pay. Others interpret high pay as the result of optimal contracting in a …

managers. Flows respond quickly and strongly to performance; lagged performance has a monotonically decreasing impact on flows … times as large as direct incentives from incentive fees and returns to managers' own investment in the fund. For new funds … generated for their investors in a given year, managers receive close to another dollar in direct performance fees plus the …

responds strongly to innovations in shareholder wealth; measured as dollar changes in compensation, incentives have … strengthened over time, measured as percentage changes in wealth, they have not changed in any appreciable way …

Data for a sample of 558 CEOs over 1985-1990 suggest substantial compensation premia for managers of diversified firms …