Executive Pensions

47 Pages Posted: 22 Jan 2006 Last revised: 16 Jul 2010

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Robert J. Jackson, Jr.

Professor of Law

Multiple version iconThere are 2 versions of this paper

Date Written: December 2005

Abstract

Because public firms are not required to disclose the monetary value of pension plans in their executive pay disclosures, financial economists have generally analyzed executive pay using figures that do not include the value of such pension plans. This paper presents evidence that omitting the value of pension benefits significantly undermines the accuracy of existing estimates of executive pay, its variability, and its sensitivity to performance companies. Studying the pension arrangements of CEOs of S&P 500, we find that the CEOs' plans had a median actuarial value of $15 million; that the ratio of the executives' pension value to the executives' total compensation (including both equity and non-equity pay) during their service as CEO had a median value of 34%; and that including pension values increased the median percentage of the executives' total compensation composed of salary-like payments during and after their service as CEO from 15% to 39%.

Suggested Citation

Bebchuk, Lucian A. and Jackson, Jr., Robert J., Executive Pensions (December 2005). NBER Working Paper No. w11907, Available at SSRN: https://ssrn.com/abstract=872743

Lucian A. Bebchuk (Contact Author)

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Robert J. Jackson, Jr.

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