1 / 4

Joe Mahoney University of Illinois at Urbana-Champaign

Economics, Organization and Management Chapter 13: Executive and Managerial Compensation. Joe Mahoney University of Illinois at Urbana-Champaign. Milgrom and Roberts (1992): Chapter 13 Economics, Organization & Management.

karolr
Télécharger la présentation

Joe Mahoney University of Illinois at Urbana-Champaign

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Economics, Organization and ManagementChapter 13: Executive and Managerial Compensation Joe Mahoney University of Illinois at Urbana-Champaign

  2. Milgrom and Roberts (1992): Chapter 13 Economics, Organization & Management • Managers who have human capital in a firm may be risk-averse. • Giving stock options to managers, which rewards them for making positive NPV investments may offset some of this risk aversion. • To avoid accepting too many risky projects, the company may need to have different groups approve a decision.

  3. Milgrom and Roberts (1992): Chapter 13 Economics, Organization & Management • Deferred compensation formulas, where payments are tied to the firm’s future performance will help encourage managers to take a long-term view rather than to concentrate excessively on short-term results. • Payment in stock that cannot be sold immediately or in options that cannot be exercised before a certain date would be examples.

  4. Milgrom and Roberts (1992): Chapter 13 Economics, Organization & Management • A major debate concerns the pay received by CEOs of large U.S. firms. • Some observers see them as the outcome of managerial greed. • Others worry that executives are not paid enough to attract the best talent corporations rather than to such fields as investment banking, consulting and entrepreneurship. • Another concern is that there are not sufficient financial incentives to solve agency problems between managers and shareholders.

More Related