This study examines the ex-post consequences of CEO compensation for shareholder value. The main objective is to explore whether companies that pay their CEO excessive fees (in comparison to those of peer firms in the same industry and size group) generate superior future returns and better...

We present a model where firms compete for scarce managerial talent ("alpha") and managers are risk-averse. When managers cannot move across firms after being hired, employers learn about their talent, allocate them efficiently to projects and provide insurance to low-quality managers. When...

Since 2009, the European Commission requires firms to incorporate an array of new elements into CEO compensation contracts, such as bonus caps, claw back provisions, bonus deferral, performance-vesting, and minimum shareholding guidelines. This paper examines whether CEO contract design in line...

We examine how incentive compensation for nonfamily executives in family firms differs from incentive compensation for executives in nonfamily firms. Nonfamily executives in family firms receive significantly less performance-based pay and equity-based pay. Family monitoring, risk aversion, and...

This paper investigates the impact of managerial compensation on the likelihood of covenant violations and reports that higher CEO risk-shifting incentives significantly increase the likelihood of covenant violations. Evidence suggests that CEOs with creditor unfriendly compensation in leveraged...

The objective of this paper is to define the relationship between a set of factors and CEO compensation that will enable companies to imply better corporate governance practices in their management process. Developed econometric model is tested on the data of US telecom companies for the period...

We study pay spillovers within the network of peer compensation benchmarking and show that these can reconcile growth differences and convergence in CEO compensation. Specifically, compensation of a small group of prominent, highly-central network firms is shown to have a substantial spillover...

We examine the ex-ante optimality of repricing of executive stock options while considering the tax effects of new accounting rules associated with traditional repricing. Although there has been a body of empirical literature on repricing, the optimality of repricing after considering the...

Using data that includes specific contractual details of Relative Performance Evaluation (RPE) contracts granted to executives for 1,833 firms for the period 1998 to 2012, we develop new methods to characterize RPE awards and measure their value and incentive properties. The frequency in the use...

This paper demonstrates that executive compensation convexity, measured as the sensitivity of managerial equity compensation portfolios to stock volatility, predicts firm-specific crashes. A bottom-to-top decile change in compensation convexity results in a 21% increase in a firm's crash risk...