Performance Pay and Top-Management Incentives绩效工资和高层管理人员的激励机制.pptVIP

Performance Pay and Top-Management Incentives By: Michael Jensen, and Kevin Murphy Purpose To estimate the magnitude of the incentives provided by each of the following mechanisms. Incentive Generating Mechanisms Performance- based bonuses Performance- based salary revisions Stock Options Performance- based dismissal decisions Agency Theory Suggests: Compensation policy should be designed to give the manager the incentives to select and implement actions that increase the shareholders wealth. *Paying CEO’s on basis of increased shareholder wealth is the objective of the owners. CEO Compensation Deferred Compensation Stock Options Profit- Sharing Arrangements Stock Grants Savings plans Long-term performance plans Other fringe benefits Equation (1) CEO cash compensation and firm performance as measured by a change in shareholder wealth. Δ(CEO salary+ bonus)t = a + b(Δshareholder wealth)t This equation assumes that current stock price performance affects current compensation. But that decision could be made before final earnings data is in. This equation assumes that current stock price performance affects current compensation. But that decision could be made before final earnings data is in. Equation (2) Allows current pay revisions to be based on past as well as current performance. Δ(CEO salary+ bonus)t = a + b(Δshareholders wealth)t+ b2(Δshareholders wealth)t-1 This regression may have better results than equation (1) but you can’t tell if it represents a real lag of rewards on performance and how much represents simple measuring errors caused by lags in reporting. Equation (3) The relation between total compensation and firm performance based on the Forbes total compensation data, excluding both stock option grants and the gains from exercising stock options. The dependent variable in equation (3) represents the change in the current cash flows accruing to the CEO, the independent variables represent the dis