This paper examines the effects of a shock to the stock-price formation process on the design of executive incentive contracts. We find that an exogenous removal of short-selling constraints causes firms to convexify compensation payoffs by granting relatively more stock options to their...

Research suggests that restricted labor mobility discourages managers from investing in human capital and reduces firm value. However, whether firms re-incentivize managers to mitigate its adverse effects remains unexplored. We find that after the adoption of the inevitable disclosure doctrine...

Executive pay has become a regulatory flashpoint of the global financial crisis. In contrast to the traditional non-interventionist approach to executive compensation, it has galvanized regulators around the world to search for effective responses to the perceived problem of executive pay. These...

This paper, which was first presented as a conference paper at the Annual 2009 Supreme Court of New South Wales Conference in June 2009, considers the impact of the global financial crisis on the regulation of executive pay in a range of common law jurisdictions, including the United States, the...

Berkshire Hathaway Vice Chairman Charlie Munger is well known as the partner of CEO Warren Buffett and also for his advocacy of “multi-disciplinary thinking” — the application of fundamental concepts from across various academic disciplines to solve complex real-world problems. One problem...

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...

We show in a theoretical model that credit default swaps induce managerial agency problems through two channels: reducing the opportunity for managers to transfer value to equityholders from creditors via strategic default, and reducing the intensity of monitoring by creditors, which leads to...

I document the richness of CEO compensation packages and show that boards learn about the desirability of the many complex package features through observing how these features are associated with firm performance. I first capture the detailed features of plan-based awards for CEOs of the...

Using a proprietary database for the largest 158 European companies during 1999-2004, I find that transparency of executive pay disclosures and sensitivity of executive pay to performance increase with the proportion of top executives serving as company directors and with dual CEO/board chairs....

The newly enacted federal Say on Pay rule will require public firms to periodically provide shareholders with an opportunity to cast an advisory vote regarding its most recent year's executive compensation. Like other efforts to increase shareholder power, Say on Pay has attracted criticism from...