Total Compensation Strategy

Journal of Applied Corporate Finance, Vol. 8, No. 2, Summer 1995

Posted: 25 May 1998  

Steven O'Byrne

Bureau of Labor Statistics


In Total Compensation Strategy," Steven O'Byrne argues that the typical corporate compensation plan is flawed. Even though a large proportion of the current year's compensation may be "at risk," the commitment to maintaining competitive levels of compensation in all future years effectively ensures that a large proportion of the executive's wealth is not at risk. To create a total wealth incentive that approaches entrepreneurial incentives, the author argues, total compensation strategy must be based on policies that make a substantial proportion of management wealth sensitive to current performance. These policies include front-loaded option grants, fixed-share option grant guidelines, and formula-based rather than negotiated bonus plans.

JEL Classification: G30

Suggested Citation

O'Byrne, Steven, Total Compensation Strategy. Journal of Applied Corporate Finance, Vol. 8, No. 2, Summer 1995. Available at SSRN:

Steven O'Byrne (Contact Author)

Bureau of Labor Statistics ( email )

Larchmont, NY 10538

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