1. Performance measures for CEOs vary greatly, study finds

    Performance measures for CEOs vary greatly, study finds

    As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have tied CEO compensation to performance. The study found large variations in the choice of performance measures, and the researchers said that companies tend to choose measures that are ...

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    1. In growth firms, where CEO optimal actions are improving long-term growth opportunities, end-of-year accounting performance measures are likely to be less informative of optimal CEO actions.
    2. These CEOs are likely to own a large stake in the firm, so the incentives coming from the compensation are rather small compared with the incentives associated with their holdings.
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