Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to … whether the widely used class of Residual Income based performance measures - such as Economic Value Added (EVA) - is … economic circumstances and the self-selection of firms using EVA. Our findings indicate that EVA is a distorted performance …

Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts … noise and distortion of a performance measure can be measured. Courty and Marschke (2007) have recently developed an elegant … empirical test to detect distortion, based on the degradation of a performance measure subsequent to increasing its weight in …

We investigate the role of Relative Performance Evaluation (RPE) theory in CEO pay and turnover using a product … affecting the firm and its peers) while evaluating CEO performance and that the extent of filtering increases with the number of …

the announcement of a clawback adoption, as well as post-adoption stock and accounting performance, are significantly and …

We develop a measurement-error framework for assessing the quality of relative-performance metrics designed to filter … out the systematic component of performance, and analyze relative total shareholder return (rTSR)-the predominant metric … market participants use to isolate managers' idiosyncratic performance-chosen by boards to evaluate managers. Among firms …

with these numbers is that they are static and do not reflect how pay changes with performance. Activist fund ValueAct … relation between pay and performance?• Are large “minimum” payments indicative of managerial abuse?• What insights does this …

adopting a relative performance evaluation (RPE) plan, total and idiosyncratic risk are higher, and the correlation between … firm and industry performance is lower. The opposite is true for firms that adopt absolute performance evaluation (APE …) plans. Plans including accounting-based performance metrics and/or cash payouts have weaker risk-related incentives. The …

The litmus test for an effective compensation program is whether it provides “pay for performance.” While the concept … of pay for performance is simple, its implementation is not. In particular, boards must consider not only whether a … package that offered exponential rewards for exceptional long-term performance. We ask: How can shareholders tell whether the …

time, measured as percentage changes in wealth, they have not changed in any appreciable way. -- CEO ; Pay–Performance …