Are CEOs Really Paid Like Bureaucrats?

19981,358 citationsJournal Article

Authors

Brian J. Hall · National Bureau of Economic Research

Jeffrey B. Liebman · National Bureau of Economic Research

Abstract

A common view is that there is little correlation between firm performance and CEO pay. Using a new fifteen-year panel data set of CEOs in the largest, publicly traded U. S. companies, we document a strong relationship between firm performance and CEO compensation. This relationship is generated almost entirely by changes in the value of CEO holdings of stock and stock options. In addition, we show that both the level of CEO compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980, largely because of increases in stock option grants.

Topics & Keywords

Corporate Finance and Governance Financial Reporting and Valuation Research Financial Markets and Investment Strategies

Publication Details

Published in: The Quarterly Journal of Economics

Volume 113, Issue 3, pp. 653-691

DOI: 10.1162/003355398555702

Field-Weighted Citation Impact: 59.89

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Are CEOs Really Paid Like Bureaucrats?

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Abstract

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Publication Details