Agency Conflicts and Short- vs Long-Termism in Corporate Policies

The paper demonstrates that the optimal incentive contract generates short- or long-termism in corporate policies, defined as short- or long-term investment levels above the levels attainable in the absence of agency frictions. In other words, short- or long-termism can be an optimal response to the dual agency problem over the short and long run. Long-termism…

The Insidious Vocabulary of CEO Compensation

As you can imagine, a lot of energy and creativity is going into figuring out how to make sure executives do not lose their bonuses because of COVID-19 economic uncertainty. We are watching this closely as it subverts the entire concept of incentive compensation if it is all upside and no downside. Incentive compensation is…

Half of companies are reviewing their pay policies after #MeToo and Time’s Up

We hope this review is accompanied by clear and effective incentives and consequences to ensure a safe work environment with equal opportunities for women and minorities. Forty-eight percent of companies say they’re reviewing their pay policies to ensure parity between men and women in light of the #MeToo phenomenon and Hollywood’s Time’s Up movement, according…