scholarly journals The Timing of Discretionary Bonuses: Effort, Signals, and Reciprocity

2018 ◽  
Author(s):  
Luke Boosey ◽  
Sebastian J. Goerg
Keyword(s):  
Discretionary Bonuses

Discretion in Bonus Plans

2010 ◽  
Vol 85 (6) ◽  
pp. 1921-1949 ◽  
Author(s):  
Merle Ederhof
Keyword(s):  
Financial Performance ◽  
Performance Measures ◽  
Empirical Support ◽  
Performance Measure ◽  
Incentive Contracts ◽  
Bonus Payments ◽  
Medium Range ◽  
Primary Hypothesis ◽  
Discretionary Bonuses ◽  
Bonus Plans

ABSTRACT: This study examines discretionary bonus payments by firms to senior-level executives. Interpreting discretionary bonuses as the result of implicit incentive contracts, I analyze an analytical model that includes a contractible and a non-contractible performance measure. The model yields the primary hypothesis that discretionary bonuses occur when the outcome of the contractible measure is either low or high, but not when the contractible outcome falls in the medium range. Based on a sample collected from public sources, I find empirical support for the notion that discretionary bonuses are paid based on non-contractible performance measures that are related to future financial performance. Moreover, discretionary bonus payments occur significantly more often when the contractible performance measure falls in the tails of the distribution. In contrast, I do not find support for the predictions that discretionary bonus payments are related to the manipulability of the contractible performance measures or that discretionary bonus payments are related to the power of the executives in the companies.

scholarly journals The timing of discretionary bonuses – effort, signals, and reciprocity

2020 ◽  
Vol 124 ◽  
pp. 254-280
Author(s):  
Luke Boosey ◽  
Sebastian Goerg
Keyword(s):  
Discretionary Bonuses

Discretionary bonuses and turnover

2019 ◽  
Vol 60 ◽  
pp. 30-49
Author(s):  
Emre Ekinci
Keyword(s):  
Discretionary Bonuses

scholarly journals Subjective Evaluations: Discretionary Bonuses and Feedback Credibility

2015 ◽  
Vol 7 (1) ◽  
pp. 99-108 ◽  
Author(s):  
William Fuchs
Keyword(s):  
Subjective Evaluations ◽  
Discretionary Bonuses

We provide a new rationale for the use of discretionary bonuses. In a setting with unknown match qualities between a worker and a firm and subjective evaluations by the principal, bonuses are useful in order to make the feedback from the firm to the workers credible. This way workers in good matches are less inclined to accept outside offers. (JEL D82, J33, M12, M52)

The Choice of Different Types of Subjectivity in CEO Annual Bonus Contracts

2011 ◽  
Vol 86 (6) ◽  
pp. 2023-2046 ◽  
Author(s):  
Felix Höppe ◽  
Frank Moers
Keyword(s):  
Data Availability ◽  
Ex Post ◽  
Optimal Contracting ◽  
Ex Ante ◽  
Different Types ◽  
The Board Of Directors ◽  
Optimal Action ◽  
Performance Dimensions ◽  
Discretionary Bonuses ◽  
Action Choice

ABSTRACT In assessing the performance of the CEO, subjectivity by the board of directors is often present in one form or another. We specifically focus on: (1) the ex ante option to ex post override a formula-based contract (“discretionary bonus”), and (2) the ex ante absence of any formula in a contract (“subjective weights”). We argue that the two types of deviations are driven by different contracting problems, which relate to whether post-contract information does or does not affect the agent's optimal action choice. We refer to these different contracting problems as problems of risk and problems of noncongruity, respectively, and hypothesize that discretionary bonuses are used for risk-reduction purposes, while subjective weights on different performance dimensions are used for congruity-improvement purposes. Our results are consistent with our expectations, showing that the use of the different types of subjectivity is consistent with optimal contracting considerations. Data Availability: All data are publicly available from the sources identified in the text.

Cash Prizes for the Employee

2020 ◽  
Vol 1(21) ◽  
pp. 27-35
Author(s):  
Olgierd Kucharski
Keyword(s):  
Point Of View ◽  
Labour Law ◽  
Prize Money ◽  
The Law ◽  
Discretionary Bonuses

The aim of the article was to analyze the genesis and construction of the prize money in labour law. In particular, the rationale of the prize was characterized: non-spam and discretionary. The article shows that from the legal dogmatic point of view, the construction of “discretionary bonuses” was developed in the 1970s, while the practice of applying the law in the following years. One new element that will appear in the jurisprudence practice is the reference to the prohibition of discrimination.

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