EXECUTIVE COMPENSATION: WHAT DO WE KNOW?

John Villavicencio Mattos, Pontificia Universidad Catolica de Puerto Rico - Ponce, Puerto Rico
Jimmy Torrez, University of Puerto Rico, Rio Piedras Campus, Puerto Rico

Published in

JOURNAL OF INTERNATIONAL FINANCE AND ECONOMICS
Volume 19, Issue 2, p55-66, June 2019

ABSTRACT

In this paper, we have reviewed the empirical and theoretical research carried out to date concerning the compensation of executives. For this, we have first summarized the importance of payment to CEOs and their relationship with the performance of the company. Second, we analyze the different perspectives of researchers during three decades; the first decade that we have considered is of the 80s, during this time the researches concentrated on studying the design of mathematical models that explain the contracts and their shortcomings. Years later, in the 1990s, the discussion was about the pay-performance link and how "optimal contracts" can alleviate agency problems. Finally, in the 2000s a new concept emerged called "managerial power", from this perspective the compensations of CEOs are considered part of the agency problem, but not a relief or solution to the problem. In the last section, we explain the different approaches that there are about the payment to the executives and we finish this work providing the pending issues that there is to be done on this topic.

Keywords

CEO compensation, Incentive compensation, Challenges of CEO Compensation, Pay-performance sensitivity, Managerial power


About the Article

Abstract, Keywords, Page Numbers, etc

About the Journal

Managing Editors, Indexing, Best Practices

About The Publisher

History, Partners, Conferences

Access the Full Article

Log-in to IABE to access full article

Search IABE

Search IABE's articles by Title, Author, or keyword

Contact Us

Send a message to IABE