• DOI:10.2139/ssrn.94009
Corpus ID: 10468097

Performance Pay and Top Management Incentives

@article{Murphy1990PerformancePA,
  title={Performance Pay and Top Management Incentives},
  author={Kevin J. Murphy and Michael C. Jensen},
  journal={Microeconomic Theory eJournal},
  year={1990}
}

Kevin J. Murphy, Michael C. Jensen

Published 1990

Economics, Business

Microeconomic Theory eJournal

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 shareholder wealth. Although the incentives generated by stock ownership are large relative to pay and dismissal incentives, most CEOs hold trivial fractions of their firms' stock, and ownership levels have declined over the past 50 years. We hypothesize that public and private political forces impose… CONTINUE READING

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