Many firms issue stock options to all employees. We consider three potential economic justifications for this practice: providing incentives to employees, inducing employees to sort, and helping firms retain employees. We gather data on firms' stock option grants to middle managers from three...

Contrary to the entrenchment view of executive compensation, I find that CEOs with more control over the firm, proxied by higher equity ownership, have smaller compensation packages and are less likely to have severance contracts. Despite lower pay, these CEOs have longer tenure and their...

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...

Explicit relative performance awards (RPE) have become an important component of executive compensation. We calculate the value and incentives of explicit RPE awards and find that RPE awards that use a custom peer group are structured both in terms of the peer group and payout design to filter...

How does access to public equity markets affect real outcomes? We examine the human capital of IPO-filing firms and how going public affects their labor force. While IPO-filing firms have high average wages and limited industrial diversification, a success-ful IPO increases departures of...

In 1991, defense contractor General Dynamics (GD) adopted an objective of creating shareholder value through downsizing, restructuring, and exit. Facilitating GD's strategy were a new management team and compensation plans that tied executive pay to shareholder wealth creation. The plans became...

Synopsis:As Ameritrade, a discount internet-brokerage firm, prepares for a seasoned equity offering, many of its senior managers at are selling their stock in the company. The CEO is concerned that the market will interpret the sales as a signal that managers believe the firm to be overvalued, a...

We study the role of firm- and manager-specific heterogeneities in executive compensation. We decompose the variation in executive compensation and find that time invariant firm and especially manager fixed effects explain a majority of the variation in executive pay. We then show that in many...

How do the labor market values of executives' personal traits evolve over time? We propose and estimate an interactive fixed effects model, which allows for time-variant valuation of unobserved manager attributes. We find that managerial talent is the most important unobserved trait determining...

This paper quantifies the “human costs of bankruptcy” by estimating employee wage losses induced by the bankruptcy filing of employers using employee-employer matched data from the U.S. Census Bureau's LEHD program. We find that employee wages begin to deteriorate one year prior to...