Are Energy Executives Rewarded for Luck?
Lucas Davis and
Catherine Hausman
The Energy Journal, 2020, vol. 41, issue 6, 157-180
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.
Keywords: Pay-for-Luck; Executive compensation; Principal-Agent problem; Rent extraction; Performance pay (search for similar items in EconPapers)
Date: 2020
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Journal Article: Are Energy Executives Rewarded for Luck? (2020) 
Working Paper: Are Energy Executives Rewarded For Luck? (2018) 
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:41:y:2020:i:6:p:157-180
DOI: 10.5547/01956574.41.6.ldav
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