Executive Compensation →

Will Demand for Women Executives Finally Shrink the Gender Pay Gap?

Women in senior management have more negotiation power than they think in today's labor market, says research by Paul Healy and Boris Groysberg. Is it time for more women to seek better opportunities and bigger pay?

Consumers Punish Firms that Cut Employee Pay in Response to COVID-19

In the wake of COVID-19, firms announced both employee furloughs and (typically small) CEO wage cuts. This research shows that firms’ treatment of employees matters far more to consumers than executive pay cuts.

The Evolution of CEO Compensation in Venture Capital-Backed Startups

Resolving uncertainty related to market demand—so called “product-market” fit—marks a key inflection point in the compensation contract for CEOs of venture-capital backed firms.

Corporate Purpose and Firm Ownership

This study shows that corporate purpose varies greatly according to the nature of firm ownership, and these differences can be least partly explained by the choices and compensation of the CEOs. The greater the pay gap between CEOs and employees, the lower the sense of corporate purpose within the organization.

If the CEO’s High Salary Isn't Justified to Employees, Firm Performance May Suffer

Researcher Ethan Rouen discovers that rank-and-file employees understand the boss deserves a big salary, but only when the number is fully explained. Open for comment; 0 Comments.

Rethinking Measurement of Pay Disparity and Its Relation to Firm Performance

Among this paper’s contributions is evidence that different types of pay disparity matter in different ways to firm employees, and that disparity created by pay that is unrelated to the economics of the firm negatively impacts employee satisfaction, with consequences for firm performance. The paper also gives investors and proxy advisors a roadmap to interpret pay ratios and pay disparity. This roadmap may help regulators and firms to, respectively, mandate and prepare more informative disclosures.

Relative Performance Benchmarks: Do Boards Get It Right?

Use of relative performance based (RPE) grants has been steadily increasing. Common wisdom is that such grants help induce costly effort from the CEO by shielding them from performance shocks that are outside of their control. This study raises questions about the use of index-based benchmarks in lieu of a narrower set of specific peers.

The Stock Market and Bank Risk-Taking

It is clear that risk-taking by financial institutions is one of the main causes of financial crises and severe recessions. Yet we know relatively little about what gives rise to such risk-taking in the first place. This paper presents evidence that a focus on short-term stock prices induces publicly-traded banks to increase risk relative to privately-held banks. The findings provide support for the view that compensation schemes should require management to hold stock for longer periods to mitigate their incentives to pump up short-term earnings and the short-term stock price.