Aktienbasierte Langfristanreize im Rahmen der Vorstandsverguetung - Evidenz auf Basis Deutscher Prime Standard Unternehmen (Stock-Based Incentives in Executive Compensation Packages - Evidence from German Prime Standard Firms)

Die Betriebswirtschaft (DBW), Vol. 70, No. 4, pp. 311-330, August 2011

CEFS Working Paper No. 2009-03

36 Pages Posted: 6 Mar 2009 Last revised: 13 Jul 2015

See all articles by Marc Steffen Rapp

Marc Steffen Rapp

University of Marburg - School of Business & Economics; University of Marburg - Marburg Centre for Institutional Economics (MACIE)

Philipp Schaller

Technische Universität München - Center for Entrepreneurial and Financial Studies

Michael Wolff

University of Göttingen

Date Written: March 5, 2009

Abstract

While in the US stock-based incentives are commonly used since the 50s of the last century, in Germany they were invented only some ten years ago. Even in 1996 firms faced considerable regulatory difficulties when willing to grant such incentives. In the meantime the legal environment has changed significantly and today even the German Corporate Governance Code encourages firms to grant stock-based long-term incentives. However, examining a hand-collected unique data-set we find that even only 37% of all German Prime Standard firms have used stock-based long-term incentives in 2006. In these firms stock-based long-term incentives account for less that 23% of the overall compensation to members of the management board. Our empirical analysis reveals that in particular large firms with high RnD expenditures, substantial opaqueness and high free-float are likely to grant stock-based long-term incentives. Furthermore, we find that high inside ownership and large blockholders are negatively correlated with the probability of granting stock-based long-term incentives. Finally, we find that an externally hired CEO increases the likelihood of stock-based incentives, in particularly if the chairman of the supervisory board is a former executive of the firm. In sum, our evidence is consistent with the view that shareholders use stock-based incentives as a governance mechanism to mitigate the agency problem in complex firms with high information asymmetry.

Note: Downloadable document is in German.

Keywords: Executive compensation, incentives, corporate governance, Germany

JEL Classification: G32, G34, M52

Suggested Citation

Rapp, Marc Steffen and Schaller, Philipp and Wolff, Michael, Aktienbasierte Langfristanreize im Rahmen der Vorstandsverguetung - Evidenz auf Basis Deutscher Prime Standard Unternehmen (Stock-Based Incentives in Executive Compensation Packages - Evidence from German Prime Standard Firms) (March 5, 2009). Die Betriebswirtschaft (DBW), Vol. 70, No. 4, pp. 311-330, August 2011; CEFS Working Paper No. 2009-03. Available at SSRN: https://ssrn.com/abstract=1354006

Marc Steffen Rapp (Contact Author)

University of Marburg - School of Business & Economics ( email )

Am Plan 2
Marburg, D-35037
Germany

University of Marburg - Marburg Centre for Institutional Economics (MACIE) ( email )

Am Plan
Marburg, 35032
Germany

Philipp Schaller

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, 80333
Germany
+49 (0)89 289 25440 (Phone)

Michael Wolff

University of Göttingen ( email )

Platz der Göttinger Sieben 3
Göttingen, DE 37073
Germany

HOME PAGE: http://www.contolling.uni-goettingen.de

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