Loading...
Pay Now, Lose Later
Palmon, Dan Santoro, Michael A. Strauss, Ron
Palmon, Dan
Santoro, Michael A.
Strauss, Ron
Author(s)
Contributor(s)
Keywords
GE Subjects
Collections
Files
Research Projects
Organizational Units
Journal Issue
Online Access
Abstract
This paper draws attention to and raises questions about an area of executive incentive compensation, bonuses and non-equity incentives, which seems to have disproportionally rewarded executives while shareholders remain exposed to substantial ongoing economic risks. This area of focus has surfaced because, beginning in 2007 and continuing throughout 2008, financial services firms incurred massive losses, while in the years immediately preceding this deluge of losses many executives were awarded substantial bonuses and non-equity incentives. We assess the risks associated with such payments and build a framework for assessing how shareholder and executive interests diverge as a result of bonuses and non-equity compensation. Our analysis is also meant to serve as a building block for future empirical studies about the relationship between executive incentive compensation paid in cash (bonuses and non-equity incentives) and the financial misstatements and overstatements of income that were at the heart of the financial meltdown.
Note(s)
Topic
Type
Article
Date
2009
Identifier
ISBN
DOI
Copyright/License
With permission of the license/copyright holder