Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81452
Authors: 
Oxelheim, Lars
Wihlborg, Clas
Zhang, Jianhua
Year of Publication: 
2010
Series/Report no.: 
IFN Working Paper 842
Abstract: 
Incentive effects of performance-based compensation schemes for management may be weakened or biased by macroeconomic influences on remuneration. These influences can be seen as reflecting luck from the CEO’s perspective. In this chapter we present a model for how to avoid compensating CEO for luck by filtering out the macroeconomic influences. In the empirical section we analyze the impact of macroeconomic, industry and firm-specific factors on the compensations (salary, bonus, options, and pensions) of CEOs in 127 Swedish corporations during the period 2001-2007. We find macroeconomic influences on Swedish CEOs’ compensation to be substantial. Distinguishing between favorable and unfavorable macroeconomic developments, we find compensation to be more responsive to favorable than to unfavorable developments in macroeconomic variables.
Subjects: 
Executive compensation
Salary
Bonus
Option
Pension
Macroeconomic uncertainty
Macroeconomic factors
Performance
Luck
JEL: 
L14
L16
M14
M21
M52
Document Type: 
Working Paper

Files in This Item:
File
Size
424.66 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.