CEO compensation: evidence from the field

Edmans, A, Gosling, T and Jenter, D (2023) CEO compensation: evidence from the field. Journal of Financial Economics. ISSN 0304-405X (In Press) OPEN ACCESS

Abstract

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. We find that directors face constraints beyond participation and incentives, and that pay matters not to finance consumption but to address CEOs’ fairness concerns. 67% of directors would sacrifice shareholder value to avoid controversy, leading to lower levels and one-size-fits-all structures. Shareholders are the main source of constraints, suggesting directors and investors disagree on how to maximize value. Intrinsic motivation and reputation are seen as stronger motivators than incentive pay. Even with strong portfolio incentives, flow pay responds to performance to fairly recognize the CEO’s contribution.

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Item Type: Article
Subject Areas: Finance
Date Deposited: 30 Oct 2023 10:32
Date of first compliant deposit: 19 Sep 2023
Subjects: Pay
Compensatory employment
Contract work
Last Modified: 11 Dec 2024 02:53
URI: https://lbsresearch.london.edu/id/eprint/3062
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