Relative Performance Evaluation in CEO Compensation: Evidence from the 2006 Disclosure Rules

2011 ◽  
Author(s):  
David De Angelis ◽  
Yaniv Grinstein
Keyword(s):  
Performance Evaluation ◽  
Ceo Compensation ◽  
Relative Performance ◽  
Relative Performance Evaluation ◽  
Disclosure Rules

scholarly journals Relative Performance Evaluation in CEO Compensation: A Talent-Retention Explanation

2019 ◽  
Vol 55 (7) ◽  
pp. 2099-2123 ◽  
Author(s):  
David De Angelis ◽  
Yaniv Grinstein
Keyword(s):  
Performance Evaluation ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Relative Performance ◽  
Retirement Age ◽  
Relative Performance Evaluation ◽  
Compensation Contracts ◽  
Talent Retention ◽  
Ceo Talent ◽  
Commitment Device

Relative performance evaluation (RPE) in chief executive officer (CEO) compensation can be used as a commitment device to pay CEOs for their revealed relative talent. We find evidence consistent with the talent-retention hypothesis, using two different approaches. First, we examine the RPE terms in compensation contracts and document features that are consistent with retention motives. Second, using a novel empirical specification for detecting RPE, we find RPE is less prevalent when CEO talent is less transferrable: Among specialist CEOs, founder CEOs, and retirement-age CEOs, as well as in industries and states where the market for CEO talent is more restrictive.

Board interlock networks and the use of relative performance evaluation

2014 ◽  
Vol 22 (3) ◽  
pp. 237-251 ◽  
Author(s):  
Qian Hao ◽  
Nan Hu ◽  
Ling Liu ◽  
Lee J. Yao
Keyword(s):  
Performance Evaluation ◽  
Boards Of Directors ◽  
Ceo Compensation ◽  
Chief Executive ◽  
Relative Performance ◽  
Board Members ◽  
Relative Performance Evaluation ◽  
Interlocking Directorates ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to explore how networks of boards of directors affect relative performance evaluation (RPE) in chief executive officer (CEO) compensation. Design/methodology/approach – In this study, the authors propose that an interlocking network is an important inter-corporate setting, which has a bearing on whether boards decide to use RPE in CEO compensation. They adopt four typical graph measures to depict the centrality/position of each board in the interlock network: degree, betweenness, eigenvector and closeness, and study their impacts on RPE use. Findings – The authors find that firms that have more connected board members and whose board members are connected to better connected firms are more likely to reward their CEOs contingent on their peers’ performance, indicating that information transmission along the board interlock network facilitates the adoption of RPE. This result is robust to alternative measures for board interlock networks and various types of CEO compensation. It highlights the role of interlocking directorates in disseminating information and practice of RPE use along board network. Originality/value – The authors use social network analysis to measure the relationships and flows between the connected nodes and study the impact on executive compensation design.

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