doi 10.1287/mnsc.1090.0999

detailed analyses of annual bonus plans, executive stock options, and option valuation), international pay differences, the pay-setting process, the relation between CEO pay and firm performance (“pay-performance sensitivities”), the relation between sensitivities and subsequent firm performance, relative

with adoption or modification of their bonus plan.

Abstract This paper investigates the compensation usefulness of accounting variables along several important dimensions (accruals-based vs. cash-flows based, non-return vs. return, and gross vs. net measures), as well as the time series variation of performance measures in CEO bonus plans, using a

We examine the extent to which firms use past performance as a basis for setting earnings targets in their executive bonus plans and assess the implications of such targets for managerial incentives. We find that well-performing firms commonly reduce earnings targets when executives fail to meet

We estimate a dynamic structural model of sales force response to a bonus based compensation plan. The paper has two main methodological innovations: First, we implement empirically the method proposed by Arcidiacono and Miller (2011) to accommodate unobserved latent class heterogeneity with a

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We test the extent to which annual bonuses paid to CEOs are excessive using an earnings-transformed barrier call model, in which following Murphy (2001) bonuses are paid for above-target performance and not otherwise. We extract the ex ante portion of realized CEO cash pay which enables us

detailed analyses of annual bonus plans, executive stock options, and option valuation), international pay differences, the pay-setting process, the relation between CEO pay and firm performance (“pay-performance sensitivities”), the relation between sensitivities and subsequent firm performance, relative

-based plan that includes quarterly and annual bonuses and an overachievement commission rates produces 18.5% higher revenues relative to a simple linear commission-only plan. Even adjusting for commission rates to allow for the same total compensation cost as in the current plan, the current bonus-based plan