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Total Compensation Strategy

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

Posted: 25 May 1998  

Stephen F. O'Byrne

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

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

Stephen F. O'Byrne (Contact Author)

Shareholder Value Advisors, Inc. ( email )

1865 Palmer Avenue, Suite 210
Larchmont, NY 10538
United States
914-833-5891 (Phone)
914-833-5892 (Fax)

HOME PAGE: http://www.valueadvisors.com/Contact.htm

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