We empirically examine standard agency predictions about how performance measures are optimally weighted to provide CEO incentives. Consistent with prior empirical research, we document that the relative weight on price and non-price performance measures in CEO cash pay is a decreasing function...

A growing body of literature suggests that because risk-averse executives are undiversified, they value equity compensation at significantly less (over 30%) than market value. This valuation discount is driven by the assumptions that the firm ignores existing incentives when it grants equity,...

We empirically examine standard agency predictions about how performance measures are optimally weighted to provide CEO incentives. Consistent with prior empirical research, we document that the relative weight on price and non-price performance measures in CEO cash pay is a decreasing function...

A growing body of literature suggests that because an executive is risk-averse and undiversified, he values equity compensation and incentives at less than market value. This discount on valuation is driven by the assumption that the executive is constrained from rebalancing his portfolio...

We examine the determinants of options outstanding, grants, and exercises by non-executive employees. Using hand-collected data on options outstanding, grants, and exercises for a broad cross-section of 795 large firms for the years 1994 to 1997, we create measures of option values and...

We develop three complementary tests to examine how adverse selection affects the design of executive compensation contracts: First, we show that externally hired CEOs receive higher total pay and have fewer equity incentives relative to internally promoted CEOs, consistent with their ability to...

This study investigates whether information about Chief Executive Officer (CEO) incentives is useful for predicting future earnings. We find that in companies with higher CEO equity incentives, current year earnings are more informative of future earnings than in other companies. Additionally,...

This paper analyzes the risk-taking properties of long-term incentive plans based on relative performance. In stark contrast to stock options, these incentive plans give undiversified, risk-averse managers an incentive to pursue projects characterized by idiosyncratic rather than systematic...

This paper investigates firm characteristics associated with the choice of individual versus group compensation schemes for senior executives below the CEO level. We define individual compensation schemes where senior executives are compensated independently from other senior executives, where...

We find that fixed effects related to the location of a firm's headquarters explain variation in broad based option grants after controlling for industry effects and firm characteristics traditionally known to affect option granting. Location matters because of local labor market conditions and...