On the relation between managerial power and CEO pay

Volume: 69, Issue: 2-3, Pages: 101300 - 101300
Published: Apr 1, 2020
Abstract
We study how friendly boards design the structure of optimal compensation contracts in favor of powerful CEOs. Our study yields unexpected results. First, powerful managers receive higher pay and a contract with a higher pay-performance sensitivity (PPS) if firm performance is low and vice versa. Moreover, we identify conditions where expected pay and expected PPS are both increasing in the friendliness of the board. Second, we show that...
Paper Details
Title
On the relation between managerial power and CEO pay
Published Date
Apr 1, 2020
Volume
69
Issue
2-3
Pages
101300 - 101300
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