Incentives, CEO Compensation, and Shareholder Wealth in a Dynamic Agency Model

1997 ◽  
Vol 76 (1) ◽  
pp. 72-105 ◽  
Author(s):  
Cheng Wang
Keyword(s):  
Ceo Compensation ◽  
Shareholder Wealth ◽  
Agency Model ◽  
Dynamic Agency

Reward for Luck in a Dynamic Agency Model

2010 ◽  
Vol 23 (9) ◽  
pp. 3329-3345 ◽  
Author(s):  
Florian Hoffmann ◽  
Sebastian Pfeil
Keyword(s):  
Agency Model ◽  
Dynamic Agency

Alternatives to Traditional Repricing of Executive Stock Options

2011 ◽  
Vol 14 (01) ◽  
pp. 35-80 ◽  
Author(s):  
Jerry T. Yang
Keyword(s):  
Stock Options ◽  
Executive Stock Options ◽  
Agency Model ◽  
Subjective Value ◽  
Dynamic Agency ◽  
Accounting Rules ◽  
Incentive Measure ◽  
Reported Earnings ◽  
The Impact ◽  
Associated Variable

The main purpose of this paper is to examine two commonly used alternatives to traditional repricing (TR) of executive stock options (ESOs) in a dynamic agency model. TR practices have become obsolete since new accounting rules took effect in July 2000. To avoid associated variable accounting charges that cause uncertainty in future reported earnings, companies have tried several TR alternatives as solutions to rescuing underwater options. We justify the occurrence of TR alternatives and quantify the impact of the marking-to-market feature imbedded in the new accounting rules. We also propose an incentive measure which is comparable to the subjective value of ESOs claimed by Ingersoll, J (2006) to rank TR alternatives in terms of agent's incentive.

scholarly journals Institutional Monitoring Of Sticky CEO Compensation

2018 ◽  
Vol 34 (2) ◽  
pp. 309-324
Author(s):  
Daecheon Yang ◽  
Kyoungwon Mo
Keyword(s):  
Institutional Investors ◽  
Firm Value ◽  
Ceo Compensation ◽  
Pay For Performance ◽  
Institutional Ownership ◽  
Shareholder Wealth ◽  
Rent Extraction ◽  
Institutional Monitoring ◽  
Underperforming Firms

This study examines the monitoring role of institutional investors in both mitigating the degree of downward-sticky CEO compensation and alleviating the undesirable effects of the sticky compensation on shareholder wealth. Particularly, we parallel the literature on “pay for performance” and institutional monitoring role to critically examine the measure of fluctuating pay-for-performance sensitivity, re-characterize the asymmetric compensation-performance link, and then capture managerial rent extraction. We find that sticky CEO compensation is significantly and negatively associated with firm value. Further, we find that institutional ownership decreases the compensation stickiness in underperforming firms and ameliorates its value-deteriorating effect.

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