Are Energy Executives Rewarded For Luck?

Lucas Davis and Catherine Hausman

No 25391, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we examine executive compensation data from 78 major U.S. oil and gas companies over a 24-year period. Perhaps in no other industry are the fortunes of so many executives so dependent on a single global commodity price. We find that a 10% increase in oil prices is associated with a 2% increase in executive compensation. This oil price effect holds for both CEOs and non-CEOs and separately for several different individual components of compensation, including bonuses. We find that the oil price effect is larger in companies with more insiders on the board, and asymmetric, with executive compensation rising with increasing oil prices more than it falls with decreasing oil prices. We then discuss potential mechanisms drawn from the broader existing literature on executive compensation.

JEL-codes: G34 J33 M12 M52 Q40 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-ene and nep-lma
Note: CF EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Lucas W. Davis & Catherine Hausman, 2020. "Are Energy Executives Rewarded for Luck?," The Energy Journal, vol 41(01).

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Journal Article: Are Energy Executives Rewarded for Luck? (2020)
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