Principal-Agent Theory and Executive Compensation
|Author:||Mgr. Tomáš Merkner|
|Year:||2004 - summer|
|Leaders:|| doc. Ing. Ondřej Schneider MPhil., Ph.D.
|Work type:|| Finance and Banking
|Awards and prizes:||M.A. with distinction from the Dean of the Faculty of Social Sciences for an extraordinarily good masters diploma thesis|
|Abstract:||We examine executive compensation and the impact of various factors on it, more precisely the influence of extraneous factors and performance indicators. We find that the impact of extraneous factors on our sample of executive compensation of 285 companies and their CEOs in 2003 is above 10%, which is a large impact and shareholders would save substantial value filtering the effect of such factors.
We also find that the relation of executive compensation and performance indicators of the company is not very strong, more exactly - performance indicators explain about 10-11% of component Bonus, 10% of component Value of Options Granted and 8-9% of Total Executive Compensation. Concluding, there is still space for further rationalizing of executive pay in large US publicly traded companies.
|Downloadable:|| Diploma Thesis - Merkner