IDEAS home Printed from https://ideas.repec.org/a/inm/orinte/v43y2013i6p590-592.html
   My bibliography  Save this article

The Ombudsman: A Closer Look at the Efficiency of Top Executive Pay and Incentives

Author

Listed:
  • Christopher S. Armstrong

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

Jacquart and Armstrong [Jacquart P, Armstrong JS (2013) Are top executives paid enough? An evidence-based review. Interfaces 43(6):580–589] offer a series of provocative recommendations aimed at improving current executive compensation practices. I argue that when executive compensation contracts are designed to achieve multiple goals, an efficient contract may call for the executive to be paid rents, which could be mistaken for excess compensation. I also discuss how the popular notion that executive compensation contracts exhibit little, if any, pay for performance is largely inaccurate, because it focuses exclusively on annual pay rather than on the change in an executive’s overall wealth. In particular, when changes in the value of executives’ stock and option holdings are taken into account, executive compensation contracts tend to exhibit substantial pay for performance.

Suggested Citation

  • Christopher S. Armstrong, 2013. "The Ombudsman: A Closer Look at the Efficiency of Top Executive Pay and Incentives," Interfaces, INFORMS, vol. 43(6), pages 590-592, December.
    • Handle: RePEc:inm:orinte:v:43:y:2013:i:6:p:590-592
    DOI: 10.1287/inte.2013.0706
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/inte.2013.0706
    Download Restriction: no
    File URL: https://libkey.io/10.1287/inte.2013.0706?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Tamer, Elie, 2010. "Partial Identification in Econometrics," Scholarly Articles 34728615, Harvard University Department of Economics.
    2. Christopher S. Armstrong & David F. Larcker & Che-Lin Su, 2010. "Endogenous Selection and Moral Hazard in Compensation Contracts," Operations Research, INFORMS, vol. 58(4-part-2), pages 1090-1106, August.
    3. Philippe Jacquart & J. Scott Armstrong, 2013. "The Ombudsman: Are Top Executives Paid Enough? An Evidence-Based Review," Interfaces, INFORMS, vol. 43(6), pages 580-589, December.
    4. Armstrong, Christopher S. & Vashishtha, Rahul, 2012. "Executive stock options, differential risk-taking incentives, and firm value," Journal of Financial Economics, Elsevier, vol. 104(1), pages 70-88.
    5. Low, Angie, 2009. "Managerial risk-taking behavior and equity-based compensation," Journal of Financial Economics, Elsevier, vol. 92(3), pages 470-490, June.
    6. Elie Tamer, 2010. "Partial Identification in Econometrics," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 167-195, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. J. Scott Armstrong & Philippe Jacquart, 2013. "The Ombudsman: Is the Evidence Sufficient to Take Action on Executive Pay? Reply to Commentators," Interfaces, INFORMS, vol. 43(6), pages 602-604, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sung Jae Jun & Sokbae Lee, 2024. "Causal Inference Under Outcome-Based Sampling with Monotonicity Assumptions," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 42(3), pages 998-1009, July.
    2. Vikesh Amin & Jere R. Behrman & Jason M. Fletcher & Carlos A. Flores & Alfonso Flores-Lagunes & Hans-Peter Kohler, 2022. "Does Schooling Improve Cognitive Abilities at Older Ages: Causal Evidence from Nonparametric Bounds," PIER Working Paper Archive 22-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    3. Chakraborty, Atreya & Gao, Lucia Silva & Sheikh, Shahbaz, 2019. "Managerial risk taking incentives, corporate social responsibility and firm risk," Journal of Economics and Business, Elsevier, vol. 101(C), pages 58-72.
    4. Millimet, Daniel L. & Roy, Jayjit, 2015. "Multilateral environmental agreements and the WTO," Economics Letters, Elsevier, vol. 134(C), pages 20-23.
    5. Breunig, Christoph & Mammen, Enno & Simoni, Anna, 2018. "Nonparametric estimation in case of endogenous selection," Journal of Econometrics, Elsevier, vol. 202(2), pages 268-285.
    6. Christian Bontemps & Raquel Menezes Bezerra Sampaio, 2020. "Entry games for the airline industry," Post-Print hal-02137358, HAL.
    7. Donald S. Poskitt & Xueyan Zhao, 2023. "Bootstrap Hausdorff Confidence Regions for Average Treatment Effect Identified Sets," Monash Econometrics and Business Statistics Working Papers 9/23, Monash University, Department of Econometrics and Business Statistics.
    8. Jiang, Tianjiao & Levine, Ross & Lin, Chen & Wei, Lai, 2020. "Bank deregulation and corporate risk," Journal of Corporate Finance, Elsevier, vol. 60(C).
    9. Laura Forastiere & Patrizia Lattarulo & Marco Mariani & Fabrizia Mealli & Laura Razzolini, 2021. "Exploring Encouragement, Treatment, and Spillover Effects Using Principal Stratification, With Application to a Field Experiment on Teens’ Museum Attendance," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 39(1), pages 244-258, January.
    10. Francis, Bill B. & Hasan, Iftekhar & Hunter, Delroy M. & Zhu, Yun, 2017. "Do managerial risk-taking incentives influence firms' exchange rate exposure?," Bank of Finland Research Discussion Papers 16/2017, Bank of Finland.
    11. Undral Byambadalai, 2022. "Identification and Inference for Welfare Gains without Unconfoundedness," Papers 2207.04314, arXiv.org.
    12. Ali Fakih & Paul Makdissi & Walid Marrouch & Rami V. Tabri & Myra Yazbeck, 2020. "Confidence in public institutions and the run up to the October 2019 uprising in Lebanon," Discussion Papers Series 629, School of Economics, University of Queensland, Australia.
    13. Laurens Cherchye & Bram De Rock & Arthur Lewbel & Frederic Vermeulen, 2015. "Sharing Rule Identification for General Collective Consumption Models," Econometrica, Econometric Society, vol. 83(5), pages 2001-2041, September.
    14. Ho, Paul, 2023. "Global robust Bayesian analysis in large models," Journal of Econometrics, Elsevier, vol. 235(2), pages 608-642.
    15. Escanciano, Juan Carlos & Hoderlein, Stefan & Lewbel, Arthur & Linton, Oliver & Srisuma, Sorawoot, 2021. "Nonparametric Euler Equation Identification And Estimation," Econometric Theory, Cambridge University Press, vol. 37(5), pages 851-891, October.
    16. Chen, Le-Yu & Lee, Sokbae, 2019. "Breaking the curse of dimensionality in conditional moment inequalities for discrete choice models," Journal of Econometrics, Elsevier, vol. 210(2), pages 482-497.
    17. Marco Stenborg Petterson & David Seim & Jesse M. Shapiro, 2023. "Bounds on a Slope from Size Restrictions on Economic Shocks," American Economic Journal: Microeconomics, American Economic Association, vol. 15(3), pages 552-572, August.
    18. Yuan Liao & Anna Simoni, 2012. "Semi-parametric Bayesian Partially Identified Models based on Support Function," Papers 1212.3267, arXiv.org, revised Nov 2013.
    19. Schuessler, Julian, 2024. "Causal analysis with observational data," OSF Preprints wam94, Center for Open Science.
    20. Vitor Possebom, 2021. "Crime and Mismeasured Punishment: Marginal Treatment Effect with Misclassification," Papers 2106.00536, arXiv.org, revised Jul 2023.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orinte:v:43:y:2013:i:6:p:590-592. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.