Performance-vesting provisions in executive compensation

J. Carr Bettis, John Bizjak, Jeffrey Coles and Swaminathan Kalpathy

Journal of Accounting and Economics, 2018, vol. 66, issue 1, 194-221

Abstract: The usage of performance-vesting (p-v) equity awards to top executives in large U.S. companies has grown from 20 to 70 percent from 1998 to 2012. We measure the effects of p-v provisions on value, delta, and vega of equity-based compensation. We find large differences in the value of p-v awards reported in company disclosures versus economic value. We also find that equity-based grants continue to convey significant compensation convexity (vega) after ASC 718 (2005) and that, counter to recent claims in the literature, our analysis empirically reaffirms the presence of a causal relation between compensation convexity (vega) and firm risk.

Keywords: Performance-vesting provisions; Executive compensation; Stock awards; Option awards; Time-vesting; Performance measures; CEO pay; Corporate governance (search for similar items in EconPapers)
JEL-codes: G13 G32 G34 J33 M41 M52 M55 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:66:y:2018:i:1:p:194-221

DOI: 10.1016/j.jacceco.2018.05.001

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