Footnote:
In: Journal of Management, Forthcoming
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 24, 2014 erstellt
Description:
Boards of directors must navigate between adopting standardized “best practices” for their CEOs' pay plans, on the one hand, and customizing their CEOs' pay to align their particular CEO's goals with those of shareholders, on the other. We build theory proposing that the incentive effects of different CEO compensation types vary consistently over CEO tenures and, therefore, that over-standardization of CEO pay plans actually can hurt shareholders. Our analysis of a sample of U.S. S&P 500 firms from 1998-2005 shows declining benefits to shareholders from performance-based compensation (i.e., options and bonuses) as CEO tenure increases, but an opposite effect for non performance-based (i.e., salary) pay. These findings can be considered a preliminary warning that normative “best practices” should not become the exclusive approach to determining CEO pay packages; instead, boards should consider more holistic approaches that incorporate the fit between CEO characteristics and organizational goals