CEO compensation: trends, market changes, and regulation
Economic Quarterly, 2008, vol. 94, issue Sum, 265-300
The average pay of a chief executive officer (CEO) in a top U.S. firm has increased six-fold in the last three decades. Simultaneously, the composition of pay has moved away from salary-based and increasingly toward performance-based compensation in the form of stock grants and stock option grants. This has strengthened the link between CEO pay and firm performance. Anecdotal evidence on the recent corporate fraud scandals suggests that some incentive problems remain unsolved. However, the academic literature reviewed in this article concludes that changes in market characteristics and the economic environment can partly explain the increase in pay and sensitivity of pay. A market-driven improvement in shareholders? power, together with recent regulatory efforts of corporate governance practices, seems to have produced a healthier corporate sector in which high salaries are not necessarily a sign of entrenchment and inappropriate incentives for executives.
Keywords: Executives; Wages (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed
Downloads: (external link)
http://www.richmondfed.org/publications/research/e ... ummer/pdf/jarque.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedreq:y:2008:i:sum:p:265-300:n:v.94no.3
Ordering information: This journal article can be ordered from
Access Statistics for this article
More articles in Economic Quarterly from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by ().