CEO Compensation
Name
Frydman_CEO Compensation.pdf
Size
386.56 KB
Format
Adobe PDF
Checksum (MD5)
f028169d9a017d937fc18d818416eccd
Author(s)
Frydman, Carola
Jenter, Dirk
Date Issued
December 2010
Journal
Annual Review of Financial Economics
Publisher
Annual Review
Citation
Frydman, Carola, and Dirk Jenter. “CEO Compensation.” Annual Review of Financial Economics 2 (2010): 75-102.
Version
Author's final manuscript
Abstract
This paper surveys the recent literature on CEO compensation. The rapid rise in CEO pay over the past 30 years has sparked an intense debate about the nature of the pay-setting process. Many view the high level of CEO compensation as the result of powerful managers setting their own pay. Others interpret high pay as the result of optimal contracting in a competitive market for managerial talent. We describe and discuss the empirical evidence on the evolution of CEO pay and on the relationship between pay and firm performance since the 1930s. Our review suggests that both managerial power and competitive market forces are important determinants of CEO pay, but that neither approach is fully consistent with the available evidence. We briefly discuss promising directions for future research.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1146/annurev-financial-120209-133958
