We document an important element of CEO compensation design – benchmarking of the pay components.
Analyzing a panel of CEO compensation data entailing 1,451 S&P 1500 firms during 2006-2019, we find that: 1) Component-of-pay benchmarking more effectively explains CEO compensation design than does total compensation benchmarking; 2) Most pay components exhibit similar benchmarking behavior; the only exception is the milder adjustment of salary to that of peers; 3) Benchmarking of the weight of each component in total compensation is also apparent. Our results suggest that benchmarking of pay components is an economically fundamental part of CEO compensation design.
This paper studies optimal executive pay when the CEO is concerned about fairness: if his wage falls below a perceived fair share of output, the CEO...
We study the market for CEOs of large publicly-traded US firms, analyze new CEOs’ prior connections to the hiring firm, and explore how hiring choices...