Serial CEO Incentives and the Structure of Managerial Contracts
Posted: 28 Feb 2011
There are 3 versions of this paper
Serial CEO Incentives and the Structure of Managerial Contracts
Serial CEO Incentives and the Structure of Managerial Contracts
Date Written: February 25, 2011
Abstract
I explore CEOs' incentives to select firm strategies and to acquire firm-specific skills when CEOs have job-hopping opportunities. Several features of managerial compensation, such as benchmarking of pay to larger and more prestigious companies, payments unrelated to past performance, unrestricted stock awards for highly paid CEOs, long-term incentives, and higher pay in companies granting long-term incentives, emerge in the optimal contract. I argue that the model can explain the change in the structure and the surge in U.S. CEO compensation as well as differences across countries and across firms within a country.
Suggested Citation: Suggested Citation