In Spain, voltage regulation in transmission networks is mainly done by controlling the reactive power in conventional generators. In wind energy, an incentive payment related to the reactive power compensation is applied. The maximum value of incentive payment and the objective power factor depend on the period of the day: peak, valley or flat. In this paper, a different behaviour is proposed,...

PFP is an incentive scheme in which employees receive extra, performancedependent compensation for their work if they reach certain performance targets. The most common form of PFP incentive awards are cash bonuses. Nearly all firms above minimal size provide some form of PFP to some employees, at least to management level and above. But PFP schemes are also provided at nonmanagement levels and...

Agency theory posits that debt-like compensation (such as defined-benefit pensions and other deferred compensation) aligns managerial interests more closely with those of debtholders and reduces the agency cost of debt. Consistent with theory, we find that a higher CEO relative leverage, defined as the ratio of the CEO's inside leverage (debt-toequity compensation) to corporate leverage, is ass...

This paper studies the relationship between executive compensation and corporate performance of global energy companies. Data from 121 listed companies 2010 to 2019 were collected for empirical analysis. The results show that in industry, has a significant positive impact on performance, which is consistent with agency theory, tournament theory social network theory. In addition, we found cash ...

This paper studies how pay transparency affects organizations that reward employees based on their efforts (i.e., using “subjective performance evaluation”). First, we show triggers social comparisons require the organization to its an “envy premium”. premium reduces value of employment relationship organization, and thus incentive subjective bonuses hard-working employees. To restore credibili...

Motivating innovation is an important concern in many incentive problems. For example, shareholders of large corporations often need to motivate managers to pursue more innovative business strategies. This paper shows that the optimal incentive scheme that motivates innovation exhibits substantial tolerance (or even reward) for early failure and reward for long-term success. Moreover, commitmen...

We study the agency problem between a firm and its research employees. In a multi-agent contracting setting, we show explicitly the way in which the optimal incentive regime is a function of how agents’ efforts interact with one another: relative-performance evaluation is used when their efforts are substitutes whereas joint-performance evaluation is used when their efforts are complements. We ...

This paper examines managerial compensation in an environment where managers may take a hidden action that affects the actual earnings of the firm. When realized, these earnings constitute hidden information that is privately observed by the manager, who may expend resources to generate an inflated earnings report. We characterize the optimal managerial compensation contract in this setting, an...