[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-325342-105":59,"doc-detail-325342-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","fear-and-loathing-in-executive-pay","Fear and Loathing in Executive Pay","","Explores the economics of executive incentives and how corporate compensation structures relate to firm performance. Discusses major components of pay, including salaries, bonuses, stock ownership, stock options, and dismissal, and the way these elements shape managerial incentives. Presents the performance/pay ratio framework using data on 430 U.S. CEOs, emphasizing stock-based rewards and stockholder value as the performance measure, while noting estimation error and dismissal effects on pay-related wealth.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/fear-and-loathing-in-executive-pay/325342/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/fear-and-loathing-in-executive-pay/325342.png","ImageObject",300,407,{"name":92,"@type":93},"Ivy","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What are the main components of executive compensation discussed in the document?","Question",{"text":113,"@type":114},"Compensation is broken down into five elements: salaries, bonuses, stock ownership, stock options, and dismissal.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How does the document evaluate the link between CEO pay and company performance?",{"text":118,"@type":114},"It argues that remuneration ultimately reduces to how the executive’s wealth depends on the firm’s value, using a performance/pay ratio that tracks wealth changes as shareholder wealth shifts.",{"name":120,"@type":111,"acceptedAnswer":121},"Why does the document use changes in total shareholder value as the performance measure?",{"text":122,"@type":114},"Because stockholders legally own the firm and stock prices reflect market valuation of the company as an asset, the increase in shareholder value is treated as a performance proxy.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},325342,1790241278,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},549758252649,"https://ap-avatar.wpscdn.com/avatar/8000253669c5317157?_k=1778319167496531819","by Joseph G.Haubrich  \nFr  \nsome reason,people take offensewhen a corporate executive begins tomake as much money as a basketball staror swimsuit model.Though at firstglance some might see thisas anotherexample of the ill-informed anti-businessbias of the American public and media,the disgruntlement in fact arises fromaserious concern:the connection betweenexecutive pay and company performance.  \nIt's not hard to imagine that successfullyrunning a major corporation isa skill asrare and valuable as the ability to hitthree-point shots or to look photogenic inspandex.The trouble comes in when aCEO does not run the company verywell.Is a pay cut or termination in order?The model has an incentive to stay slim.Is the CEOmotivated to do as well?  \nThis Economic Commentary looks atthe economics of executive incentives,focusing on how companies choose tomotivate their topofficers.Perhaps sur-prisingly,it appears that CEO payshould not be extremely sensitive tocompany performance.  \n## ■ Incentive Schemes\n\nDiscussions about executive compensa-tion frequently sound like a foreign lan-guage.Compensation schemes take manyforms,at times designed as much toexploit provisions in the tax code as tomotivate managers.But despite its com-plexities,compensation boils down tofive elements:salaries,bonuses,stockownership,stock options,and dismissal.In most cases where pay depends stronglyon a firm's performance,the executive  \n# Fear andLoathing in Executive Pay\n\nhas large stock holdings.Warren Buffet,who controls 45 percent of BerkshireHathaway's stock,feels any change in thecompany's fortunes quite directly.  \nSeveral more involved forms of compen-sation also tie executive pay toa firm'sperformance level.For instance,a com-pany may grant its executive an option tobuy stock in the firm.Typically,he mustwait 12months before exercising theoption(buying the stock),and at thattime,can exercise only one-quarter of theoptions granted,with another quarterbecoming vested at the beginning of eachyear.Some corporations grant bonusesat the discretion of the board of directors,while others establish objective perform-ance goals.  \nThe rewards for meeting these goals frequently,but not always,depend on thefirm's stock price.Many companies userestricted stock awards,which give man-agers a fixed amount of stock that theycannot sell before the end of a givenperiod.Others find that the rapidly devel-oping derivatives market allows moreexotic ways to compensate executives,such as through equity swaps.1 Combin-ing these elements leads to a wide rangeof possible compensation plans.2  \nUnsatisfactory performance can alsoresult in dismissal.One study revealedthat firms doingpoorly (in the bottom 10percent of the performance distribution)had roughly twice the CEO turmover offirms that were doing well(top 10 per-cent).3 Neither number was excessive,however—6 percent versus 3 percent.  \nNovember 1,1994  \nAccording to a well-known executivecompensation eritic,America's mostoverpaid CEO has pocketed S91 million more than warranted by his com-pany's performance since 1991.Manyare understandably outraged by suchreports,and there is a movementafoot in both the United States andBritain to rein in what is viewed asexcessive executive pay.In this arti-cle,the author examines how U.S.companies choose to motivate theirtop officers and whether pay forperformance is in fact desirable.Surprisingly,the evidence suggeststhat linking executive compensationtoo closely to firm performance maybea mistake.  \nIn companies that did exceptionallybadly(either defaulting on their bondsor going bankrupt),more than half ofthe CEOs lost their jobs.⁴  \nThese complexities should not be al-lowed to obscure the ultimately simplerelationship between executive compen-sation and firm performance.Any remu-neration scheme,no matter how convo-luted,reduces to a basic measure ofincentives:How does the executive'swealth depend on the value of the firm?In other words,when the firm becomesmore valuable(when the sto","cbCaibdwzx7rpfHL","https://ap.wps.com/l/cbCaibdwzx7rpfHL","pdf",1268914,"English","# Incentive Schemes\n## The Facts","[{\"question\":\"What are the main components of executive compensation discussed in the document?\",\"answer\":\"Compensation is broken down into five elements: salaries, bonuses, stock ownership, stock options, and dismissal.\"},{\"question\":\"How does the document evaluate the link between CEO pay and company performance?\",\"answer\":\"It argues that remuneration ultimately reduces to how the executive’s wealth depends on the firm’s value, using a performance/pay ratio that tracks wealth changes as shareholder wealth shifts.\"},{\"question\":\"Why does the document use changes in total shareholder value as the performance measure?\",\"answer\":\"Because stockholders legally own the firm and stock prices reflect market valuation of the company as an asset, the increase in shareholder value is treated as a performance proxy.\"}]","Fear and Loathing in Executive Pay | PDF",1789970274,13]