Total Compensation Strategy

Posted: 25 May 1998


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:

Stephen F. O'Byrne (Contact Author)

Shareholder Value Advisors, Inc. ( email )

21 Bonnie Way
Larchmont, NY 10538
United States
914-833-5891 (Phone)


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