Maintaining Optimal CEO Incentives through Equity Grants and CEO Portfolio Rebalancing

@inproceedings{Li2002MaintainingOC,
  title={Maintaining Optimal CEO Incentives through Equity Grants and CEO Portfolio Rebalancing},
  author={Ying Li},
  year={2002}
}
This paper examines the joint hypotheses that firms set optimal levels for CEO incentives, and that firms and CEOs jointly correct deviations from these optimal levels through equity grants and CEO portfolio rebalancing. I investigate two equity-based CEO incentives, pay-forperformance sensitivity and risk-taking incentive. Pay-for-performance sensitivity is defined as the change in CEO wealth for a given change in the firm’s stock price, while risk-taking incentive the sensitivity of CEO… CONTINUE READING