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Performance Pay and Top Management Incentives
Our estimates of the pay-performance relation (including pay, options, stockholdings, and dismissal) for chief executive officers indicate that CEO wealth changes $3.25 for every $1,000 change in
Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence
This paper studies optimal incentive contracts when workers have career concerns--concerns about the effects of current performance on future compensation. We show that the optimal compensation
Subjective Performance Measures in Optimal Incentive Contracts
It is shown that if objective measures are sufficiently close to perfect then no implicit contracts are feasible (because the firm's fallback position after reneging on an implicit contact is too attractive), and that objective and subjective measures can reinforce each other.
Relational Contracts and the Theory of the Firm
Relational contracts—informal agreements sustained by the value of future relationships—are prevalent within and between firms. We develop repeated-game models showing why and how relational
Compensation and Incentives: Practice vs. Theory
A thorough understanding of internal incentive structures is critical to developing a viable theory of the firm, since these incentives determine to a large extent how individuals inside an
Relative Performance Evaluation for Chief Executive Officers
Relative performance evaluation (RPE) provides employees with an incentive to perform well while insulating their compensation from shocks that also affect the performances of other workers in the
The Prince and the Pauper? CEO Pay in the United States and United Kingdom
We document differences in CEO pay and incentives in the United States and the United Kingdom for 1997. After controlling for size, sector and other firm and executive characteristics, CEOs in the US