Executive Compensation: A Modern Primer

摘要: This article studies traditional and modern theories of executive compensation, bringing them together under a simple unifying framework accessible to the general-interest reader. We analyze assignment models level pay, static dynamic moral hazard incentives, compare their predictions empirical findings. make two broad points. First, find it difficult explain data, suggesting that compensation results from "rent extraction" by CEOs. However, more "shareholder value" arguably better capture CEO setting do deliver consistent with observed practices, these practices need not be inefficient. Second, seemingly innocuous features modeling setup, often made for tractability or convenience, can lead significant differences in model's implications conclusions on efficiency practices. close highlighting apparent inefficiencies additional directions future research.