Agency, Delayed Compensation, and the Structure of Executive Remuneration

JONATHAN EATON; HARVEY S. ROSEN

doi:10.1111/j.1540-6261.1983.tb03836.x

Agency, Delayed Compensation, and the Structure of Executive Remuneration

JONATHAN EATON, HARVEY S. ROSEN

Economics

Research output: Contribution to journal › Article › peer-review

91 Scopus citations

Abstract

In this paper we examine the factors affecting the structure of executives' compensation packages. We focus particularly on the role of various types of delayed compensation as means of “bonding” executives to their firms. The basic problem is to design a compensation package that rewards actions that are in the long‐run interest of the stockholders. Firms must take into account their ability to discern unfortunate circumstances from mismanagement, the extent to which a compensation package forces the executive to face risks beyond his control, and the willingness of a given executive to bear this risk. We use our theory to interpret some executive compensation data from the early 1970s. 1983 The American Finance Association

Original language	English (US)
Pages (from-to)	1489-1506
Number of pages	18
Journal	The Journal of Finance
Volume	38
Issue number	5
DOIs	https://doi.org/10.1111/j.1540-6261.1983.tb03836.x
State	Published - Dec 1983

All Science Journal Classification (ASJC) codes

Accounting
Finance
Economics and Econometrics

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10.1111/j.1540-6261.1983.tb03836.x

Cite this

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Agency, Delayed Compensation, and the Structure of Executive Remuneration

Abstract

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