Comments on Shan and Walter: towards a set of design principles for executive compensation contracts

Stacey Beaumont; Raluca Ratiu; David Reeb; Glenn Boyle; Philip Brown; Alexander Szimayer; Raymond da Silva Rosa; David Hillier; Patrick McColgan; Athanasios Tsekeris; Bryan Howieson; Zoltan Matolcsy; Helen Spiropoulos; John Roberts; Tom Smith; Qing Zhou; Peter Swan; Stephen Taylor; Sue Wright; David Yermack

doi:10.1111/abac.12091

Comments on Shan and Walter: towards a set of design principles for executive compensation contracts

Stacey Beaumont, Raluca Ratiu, David Reeb, Glenn Boyle, Philip Brown, Alexander Szimayer, Raymond da Silva Rosa, David Hillier, Patrick McColgan, Athanasios Tsekeris, Bryan Howieson, Zoltan Matolcsy, Helen Spiropoulos, John Roberts, Tom Smith, Qing Zhou, Peter Swan, Stephen Taylor, Sue Wright, David Yermack

Accounting And Finance

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Abstract

This paper is developed around the set of design principles for executive compensation contracts as outlined in the study of Shan and Walter (2014). We propose guidance for determining an appropriate CEO starting compensation level based on past performance and the market for managerial talent. We also outline factors to be considered in determining annual changes to CEO compensation. This paper argues that stock options and restricted stock grants should become exercisable only upon meeting both time and performance criteria against an appropriate benchmark peer group. We agree with Shan and Walter’s (2014) recommendations regarding termination payments and make suggestions on how to apply these recommendations in practice.

Original language	English
Pages (from-to)	685-771
Number of pages	87
Journal	Abacus
Volume	52
Issue number	4
DOIs	https://doi.org/10.1111/abac.12091
Publication status	Published - 29 Dec 2016

Keywords

CEO compensation
shareholders
compensation elements

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10.1111/abac.12091

Hillier_etal_Abacus_2015_CEO_compensation_that_benefitsAccepted author manuscript, 474 KB

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Beaumont, S., Ratiu, R., Reeb, D., Boyle, G., Brown, P., Szimayer, A., da Silva Rosa, R., Hillier, D., McColgan, P., Tsekeris, A., Howieson, B., Matolcsy, Z., Spiropoulos, H., Roberts, J., Smith, T., Zhou, Q., Swan, P., Taylor, S., Wright, S., & Yermack, D. (2016). Comments on Shan and Walter: towards a set of design principles for executive compensation contracts. Abacus, 52(4), 685-771. https://doi.org/10.1111/abac.12091

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abstract = "This paper is developed around the set of design principles for executive compensation contracts as outlined in the study of Shan and Walter (2014). We propose guidance for determining an appropriate CEO starting compensation level based on past performance and the market for managerial talent. We also outline factors to be considered in determining annual changes to CEO compensation. This paper argues that stock options and restricted stock grants should become exercisable only upon meeting both time and performance criteria against an appropriate benchmark peer group. We agree with Shan and Walter{\textquoteright}s (2014) recommendations regarding termination payments and make suggestions on how to apply these recommendations in practice.",

keywords = "CEO compensation, shareholders, compensation elements",

author = "Stacey Beaumont and Raluca Ratiu and David Reeb and Glenn Boyle and Philip Brown and Alexander Szimayer and {da Silva Rosa}, Raymond and David Hillier and Patrick McColgan and Athanasios Tsekeris and Bryan Howieson and Zoltan Matolcsy and Helen Spiropoulos and John Roberts and Tom Smith and Qing Zhou and Peter Swan and Stephen Taylor and Sue Wright and David Yermack",

year = "2016",

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Beaumont, S, Ratiu, R, Reeb, D, Boyle, G, Brown, P, Szimayer, A, da Silva Rosa, R, Hillier, D , McColgan, P, Tsekeris, A, Howieson, B, Matolcsy, Z, Spiropoulos, H, Roberts, J, Smith, T, Zhou, Q, Swan, P, Taylor, S, Wright, S & Yermack, D 2016, 'Comments on Shan and Walter: towards a set of design principles for executive compensation contracts', Abacus, vol. 52, no. 4, pp. 685-771. https://doi.org/10.1111/abac.12091

TY - JOUR

T1 - Comments on Shan and Walter

T2 - towards a set of design principles for executive compensation contracts

AU - Beaumont, Stacey

AU - Ratiu, Raluca

AU - Reeb, David

AU - Boyle, Glenn

AU - Brown, Philip

AU - Szimayer, Alexander

AU - da Silva Rosa, Raymond

AU - Hillier, David

AU - McColgan, Patrick

AU - Tsekeris, Athanasios

AU - Howieson, Bryan

AU - Matolcsy, Zoltan

AU - Spiropoulos, Helen

AU - Roberts, John

AU - Smith, Tom

AU - Zhou, Qing

AU - Swan, Peter

AU - Taylor, Stephen

AU - Wright, Sue

AU - Yermack, David

PY - 2016/12/29

Y1 - 2016/12/29

N2 - This paper is developed around the set of design principles for executive compensation contracts as outlined in the study of Shan and Walter (2014). We propose guidance for determining an appropriate CEO starting compensation level based on past performance and the market for managerial talent. We also outline factors to be considered in determining annual changes to CEO compensation. This paper argues that stock options and restricted stock grants should become exercisable only upon meeting both time and performance criteria against an appropriate benchmark peer group. We agree with Shan and Walter’s (2014) recommendations regarding termination payments and make suggestions on how to apply these recommendations in practice.

AB - This paper is developed around the set of design principles for executive compensation contracts as outlined in the study of Shan and Walter (2014). We propose guidance for determining an appropriate CEO starting compensation level based on past performance and the market for managerial talent. We also outline factors to be considered in determining annual changes to CEO compensation. This paper argues that stock options and restricted stock grants should become exercisable only upon meeting both time and performance criteria against an appropriate benchmark peer group. We agree with Shan and Walter’s (2014) recommendations regarding termination payments and make suggestions on how to apply these recommendations in practice.

KW - CEO compensation

KW - shareholders

KW - compensation elements

UR - http://onlinelibrary.wiley.com/journal/10.1111/%28ISSN%291467-6281

U2 - 10.1111/abac.12091

DO - 10.1111/abac.12091

M3 - Article

SN - 0001-3072

VL - 52

SP - 685

EP - 771

JO - Abacus

JF - Abacus

IS - 4

ER -

Comments on Shan and Walter: towards a set of design principles for executive compensation contracts

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Keywords

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