Using hand-collected data, we document the details of the ex-ante severance contract and the ex-post separation pay given to S&P500 CEOs upon departing from their company. We analyze for the determinants of whether or not a departing CEO receives separation pay in excess of her severance contract. This excess separation pay is on average, $8 million, which amounts to close to 242% of a CEO’s an...

This study uses cross-section and panel data from the 1998 Workplace Employee Relations Survey to explore contextual influences on the relationship between performance-related pay (PRP) and organizational performance. While it finds strong evidence that the use of PRP can enhance performance outcomes, it also determines that this relationship is qualified by the structure of workplace monitorin...

This paper examines the use of incentive pay schemes within the financial services sector in London. Various theories of wage determination are reviewed with particular attention placed on the principal-agent literature as a framework for analysing the use of incentive pay. This is combined with case study interviews and a number of hypotheses regarding the use of bonuses. Quantitative analysis...

We manipulate workers’ perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect ...

In this paper, I compare two di¤erent approaches to model implicit contracting, the in…nite-horizon approach typically used in the literature and a …nite-horizon approach building on an adverse-selection model. I demonstrate that even the most convincing result of the in…nite-horizon approach, namely that implicit contracting is improved, if the discount rate is lowered, does not carry over to ...

This experiment compares the performance of two contest designs: a standard winnertake-all tournament with a single fixed prize, and a novel proportional-payment design in which that same prize is divided among contestants by their share of total achievement. We find that proportional prizes elicit more entry and more total achievement than the winner-take-all tournament. The proportional-prize...

Article history: Received 27 October 2007 Received in revised form 18 June 2008 Accepted 18 June 2008 Available online 26 June 2008 This paper investigates the effect of stock market microstructure on managerial compensation schemes. We propose and empirically demonstrate that the sensitivity of chief executive officer's (CEO's) compensations to changes in stockholders' value is higher when the...

CEO incentive contracts are commonplace in China but their incidence varies significantly across Chinese cities. We show that city and provincial policy experiments help explain this variance. We examine the role of two policy experiments: the use of Special Economic Zones (SEZs) to attract foreign direct investment (FDI), and the rate at which state owned enterprises (SOEs) were privatised. CE...

The paper examines the role of executive compensation in inducing management behavior that triggers private securities litigation. Incentive pay in the form of options is found to increase the probability of securities class action lawsuits, holding constant a wide range of other firm characteristics. In contrast, base pay levels and share ownership do not have a significant impact on lawsuit i...

We consider a market where there is an agency relationship between the providers of a service or agents and their clients. Agents can choose to work alone or to have a sharing agreement with other agents. Sharing agreements create value by facilitating better matches between clients and agents, but they worsen incentives because of free riding. We show that in the context of a one shot game, th...