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Linking management performance incentives to shareholder wealth
Author(s) -
O'Byrne Stephen F.
Publication year - 1991
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.3970030109
Subject(s) - incentive , executive compensation , shareholder , compensation (psychology) , business , incentive program , accounting , finance , economics , microeconomics , corporate governance , psychology , psychoanalysis
This article analyzes a typical CEO's total company‐related wealth and quantifies the performance incentive provided by a typical executive compensation program. The article shows that the performance sensitivity of the CEO's total company‐related wealth is inadequate to provide an effective incentive to maximize shareholder wealth. The article shows how the typical executive compensation program can be changed to provide an effective performance incentive.