Total Compensation Strategy
Journal of Applied Corporate Finance, Vol. 8, No. 2, Summer 1995
Posted: 25 May 1998
Shareholder Value Advisors, Inc.
Abstract
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:
Suggested Citation
O'Byrne, Stephen F., Total Compensation Strategy. Journal of Applied Corporate Finance, Vol. 8, No. 2, Summer 1995. Available at SSRN: https://ssrn.com/abstract=6703
