French CEOs' Compensations: What is the Cost of a Mandatory Upper Limit?

Fabienne Llense
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Fabienne Llense: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: n the middle of the 90s, the sharp increase in globalization and the last privatization wave have promoted the shaping of a market for executives in France. Characteristics of this market are estimated for France and a competitive model is simulated in order to assess to what extent such a model can reproduce the observed chief executive officer (CEO) compensations. The size elasticity of CEOs' compensations in France is equal to 0.5 and justifies a large magnitude in compensations. To moderate these compensations, a wage cap is often called for not only by opinion and the European Left but also, more surprisingly, by representatives of shareholders. The cost of this policy is evaluated in this job assignement model and the lobbying of shareholders is investigated and explained above some thresholds.

Keywords: wage; differentials; •; executive; compensation; •; regulation; •; superstars; theory (search for similar items in EconPapers)
Date: 2010-06
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Citations: View citations in EconPapers (5)

Published in CESifo Economic Studies, 2010, 56 (2), pp.165-191. ⟨10.1093/cesifo/ifq002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00497583

DOI: 10.1093/cesifo/ifq002

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