DITTMANN, INGOLF; MAUG, ERNST; SPALT, OLIVER - In: Journal of Finance 65 (2010) 6, pp. 2015-2050
This paper analyzes optimal executive compensation contracts when managers are loss averse. We calibrate a stylized principal-agent model to the observed contracts of 595 CEOs and show that this model can explain observed option holdings and high base salaries remarkably well for a range of...