Standard principal-agent theory predicts that large firms should not use employee stock options and other stock …-based compensation to provide incentives to non-executive employees. Yet, business practitioners appear to believe that stock …-based compensation improves incentives, and mounting empirical evidence points to the same conclusion. This paper provides an explanation …

We show that long-term compensation is associated with higher pay in the financial industry and the legal sector. Then …, using a detailed survey of law school graduates, we explore why firms use long-term compensation. We find that individuals … employer to tasks that are self-enhancing are more likely to receive long-term compensation, especially in markets with high …

For the past 30 years, the conventional wisdom has been that executive compensation packages should include very large … executive compensation simply take it as a given. We argue, however, that in light of evolving corporate governance mechanisms … compensation context. In addition to the stickiness of that status quo, incentive pay's staying power has been supported by private …

Clawbacks are contractual provisions in executive compensation contracts that allow for an ex post recoupment of …

While numerous studies have examined the impact that powerful CEOs have on their compensation and overall firm … decisions, relatively little is known about how powerful CFOs influence their compensation and important firm financial … process of a firm. Using managerial power theory (Bebchuk and Fried, 2003) and the theory of power and self-focus (Pitesa and …

We explore the determinants of compensation gaps between a firm's CEO and its other top executives, and compare the … ability of two competing optimal contracting theories, namely tournament theory and productivity theory, to explain the cross … sectional variability in these gaps across firms. We find little evidence that firms design their executive compensation …

This paper develops an agency model to analyze the optimality of executive stock option compensation in the presence of … compensation, the relative size of manipulation-to-effort does not depend on the size of option compensation. Furthermore, an … optimal executive compensation package includes stock options instead of restricted stocks under most circumstances. Testable …

costly executive incentive compensation to sustain firm productivity and increase shareholder wealth …

This paper examines why powerful CEOs are paid more in total compensation. Broadly, our results are consistent with the …, this additional compensation is a premium for her superior ability. Third, we find that a founder-CEO prefers employment …