Pay for performance? Government regulation and the structure of compensation contracts

被引:176
作者
Perry, T [1 ]
Zenner, M
机构
[1] Arizona State Univ, Coll Business, Tempe, AZ 85287 USA
[2] Salomon Smith Barney, Citigrp, Financial Strategy Grp, Investment Banking Div, New York, NY 10013 USA
[3] Univ N Carolina, Kenan Flagler Business Sch, Chapel Hill, NC 72599 USA
关键词
CEO compensation; regulation; contracts; corporate governance;
D O I
10.1016/S0304-405X(01)00083-6
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
In 1992-1993, the SEC required enhanced disclosure on executive compensation and Congress enacted tax legislation limiting the deductibility of non-performance related compensation over one million dollars, i.e. Internal Revenue Code Section 162(m). We examine the effects of these regulatory changes and report small and large by the regulations. We further document that bonus and total compensation payouts are increasingly sensitive to stock returns after 1993, especially for firms with million-dollar pay packages. We also document that, once we control for other factors affecting CEO incentives, the sensitivity of the CEO's wealth to changes in shareholder wealth has increased from 1993 to 1996 for firms with CEOs near or above the million dollar compensation level. Overall, our results suggest that some firms have reduced salaries in response to 162(m). More importantly, the pay for performance sensitivity, measured using total annual compensation and firm-related CEO wealth, has increased for firms likely to be affected by 162(m). (C) 2001 Elsevier Science S.A. All rights reserved.
引用
收藏
页码:453 / 488
页数:36
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