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Executive Compensation and Incentives

Conyon, Martin (2006) Executive Compensation and Incentives. Academy of Management Perspectives, 20. pp. 25-44. ISSN 1558-9080

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Abstract

The objective of a properly designed executive compensation package is to attract, retain, and motivate CEOs and senior management. The standard economic approach for understanding executive pay is the principal-agent model. This paper documents the changes in executive pay and incentives in U.S. firms between 1993 and 2003. We consider reasons for these transformations, including agency theory, changes in the managerial labor markets, shifts in firm strategy, and theories concerning managerial power. We show that boards and compensation committees have become more independent over time. In addition, we demonstrate that compensation committees containing affiliated directors do not set greater pay or fewer incentives.

Item Type: Article
Journal or Publication Title: Academy of Management Perspectives
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 53930
Deposited By: ep_importer_pure
Deposited On: 26 Jun 2012 09:50
Refereed?: Yes
Published?: Published
Last Modified: 09 Apr 2014 23:23
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/53930

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