CEO compensation
8 important questions on CEO compensation
What is the conclusion of the article ‘Are financial incentives related to performance? A meta-analytic review of empirical research’?
What is the crowding out effect when direct incentives are present?
What are gaming behaviors
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What is the Arm’s-length contracting hypothesis?
What is board independence?
In which 5 situations is the board independence not held?
2. CEO’s power to benefit directors (through board compensation)
3. Friendship and loyalty
4. Collegiality and authority
5. Cognitive dissonance and solidarity
What is the managerial power hypothesis?
The paper “Assessing managerial power theory: a meta-analytical approach to understanding the determinants of CEO compensation” looked into the effect of indicators of managerial power on the compensation a CEO gets and on the manner in which CEOs are able to re-negotiate performance-pay, because this type of pay is not in the interest of CEOs. These indicators of power were:
- CEO tenure: number of years the executive has been CEO
- Board size: total number of directors who serve on the board
- Board independence: degree to which the board of directors operate independently from insiders
- Ownership concentration: extent to which outstanding stock is in the hands of large blockholders
- Institutional ownership: whether the owner is an institutional investor
The question on the page originate from the summary of the following study material:
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