Kevin J. Murphy
University of Southern California - Marshall School of Business; USC Gould School of Law
This paper summarizes the empirical and theoretical research on executive compensation and provides a comprehensive and up-to-date description of pay practices (and trends in pay practices) for chief executive officers (CEOs). Topics discussed include the level and structure of CEO pay (including detailed analyses of annual bonus plans, executive stock options, and option valuation), international pay differences, the pay-setting process, the relation between CEO pay and firm performance ("pay-performance sensitivities"), the relation between sensitivities and subsequent firm performance, relative performance evaluation, executive turnover, and the politics of CEO pay.
Number of Pages in PDF File: 91
JEL Classification: J33, J41, G30
Date posted: May 19, 1999