This paper provides new evidence on whether and how boards solve costly ex post settling up to recover CEO cash compensation for unrealized gains that fail to materialize. Our analyses are motivated by the likely expanding role for ex post settling up as the risk of compensating executives for...

We explore the role of stock liquidity in influencing the composition of CEO annual pay and the sensitivity of managerial wealth to stock prices. We find that as stock liquidity goes up, the proportion of equity-based compensation in total compensation increases while the proportion of...

Accounting research on choices of inventory valuation methods has focused on various consequences of two extreme methods: LIFO and FIFO. The main consequence studies relate to effects of the differences in taxes payable between the two methods on security prices. However, tax consequences appear...

The credit crisis of 2008 placed compensation practices at publicly traded firms in the United States under scrutiny. This case examines perceived excessive pay and severance packages at several firms implicated in the credit crisis of 2008, the executive compensation provisions in the Emergency...

Prior literature provides compelling evidence of an asymmetric relation between executive bonus compensation and earnings performance. In particular, this literature reports that compensation committees assign greater weight to good (positive) earnings performance than poor (negative) earnings...

We analyze CEO pay and equity holdings for the S&P 1,500 and broad industry classes. Between 1994 and 2000 real annual compensation doubled, and there was a dramatic shift from salary to option grants. The value and proportion of CEO equity holdings and the price-performance-sensitivity of their...

We study how friendly boards design the structure of optimal compensation contracts in favor of powerful CEOs. Our study yields unexpected results. First, powerful managers receive higher pay and a contract with a higher pay-performance sensitivity (PPS) if firm performance is low and vice...

Recent accounting research provides evidence that similar profit-based compensation incentives are used in for-profit and nonprofit hospitals. Because charity care reduces profits, such incentives should lead for-profit hospital managers to reduce charity care levels. Nonprofit hospital...

We examine the relation between R&D intensity and the weights on ability indicators and financial performance measures in CEO compensation. The CEO’s technology-related ability is likely more important in R&D intensive firms. Therefore, we predict that these firms place higher weights on...

There is growing public concern over the rapid growth in CEO pay relative to average worker pay (CEO pay ratio). Critics contend that high CEO pay ratios could destroy firm value by damaging employee morale and/or signal CEO rent extraction. In this paper, we use a proprietary dataset to examine...