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Author : William Timothy Mitchell
Publisher :
ISBN 13 :
Total Pages : 264 pages
Book Rating : 4.:/5 (232 download)
Download or read book Relative Performance Incentives written by William Timothy Mitchell and published by . This book was released on 2008 with total page 264 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Antonio Camara
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Download or read book The Pricing of Relative Performance Based Incentives for Executive Compensation written by Antonio Camara and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Since 1995, more than 50 percent of the firms in the FTSE-100 have granted rewards to their senior executives, the payoffs of which are contingent on the firm's stock return relative to a bench mark return over a given period (hereafter, relative performance incentives). This paper investigates and derives closed-form solutions for a class of relative performance incentives that have a positive payoff if, in addition to the traditional contingencies, the firm's stock return is higher than the market return times a threshold. Results suggest that UK firms, in practice, when relative performance incentives (RPI's) substitute absolute performance incentives (API's) tend to (i) decrease the cost of their compensation packages; (ii) undertake more risky capital-investment projects; and (iii) avoid providing so high-powered incentives to increase shareholder wealth.
Author : Josse Delfgaauw
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.:/5 (13 download)
Download or read book Dynamic Incentive Effects of Relative Performance Pay written by Josse Delfgaauw and published by . This book was released on 2013 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We conduct a field experiment among 189 stores of a retail chain to study dynamic incentive effects of relative performance pay. Employees in the randomly selected treatment stores could win a bonus by outperforming three comparable stores from the control group over the course of four weeks. Treatment stores received weekly feedback on relative performance. Control stores were kept unaware of their involvement, so that their performance generates exogenous variation in the relative performance of the treatment stores. As predicted by theory, we find that treatment stores that lag far behind do not respond to the incentives, while the responsiveness of treatment stores close to winning a bonus increases in relative performance. On average, the introduction of the relative performance pay scheme does not lead to higher performance.
Author : Jurgen Eichberger
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (318 download)
Download or read book On Relative Performance Contracts and Fund Manager's Incentives written by Jurgen Eichberger and published by . This book was released on 1997 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Martin C. Schmalz
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)
Download or read book Relative Performance Provisions and Competitive Incentives written by Martin C. Schmalz and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: After decades of theoretical inquiry, a burgeoning empirical literature now debates how ownership patterns, governance choices, and executive compensation structure affect firms' competitive behavior. An often-made assumption in the debate is that relative performance evaluation (RPE) of top management compensation encourages pro-competitive behavior. This paper shows that this claim is not generally true. Whether relative performance evaluation incentivizes more or less aggressive competition depends crucially on whether performance is measured in terms of profits or in terms of profit margins.
Author : Uday S. Murthy
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book The Effect of Relative Performance Information Under Different Incentive Schemes on Performance in a Production Task written by Uday S. Murthy and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using social comparison theory as the theoretical framework, this study investigates whether relative performance information (RPI) motivates workers in a real-effort task and whether the effects vary under piece-rate, quota-based, and budget-based incentive schemes. An experiment was conducted using a 2 (RPI: yes or no) by 3 (incentive scheme: piece-rate contract, quota-based contract, or budget-based contract) between-subjects factorial design using 135 student participants assuming the role of production workers. Results revealed a strong and consistently positive effect on task performance of providing relative performance information across the three incentive schemes. Regarding the motivational value of the incentive scheme, the results revealed that participants operating under the quota-based contract significantly outperformed those operating under the budget-based and the piece-rate contract. The interaction between RPI and incentive scheme was insignificant. Results also revealed that the performance enhancing value of RPI was most pronounced for participants in the bottom third of the performance distribution. This study provides empirical evidence on the value of configuring a firm's management accounting system to provide workers with frequent relative performance information.
Author : George Lee
Publisher :
ISBN 13 :
Total Pages : 184 pages
Book Rating : 4.:/5 (112 download)
Download or read book The Effects of Tournament Incentive Contracts and Relative Performance Feedback on Task Effort, Learning Effort, and Performance written by George Lee and published by . This book was released on 2015 with total page 184 pages. Available in PDF, EPUB and Kindle. Book excerpt: When employees work hard, they exert more effort on job tasks (task effort); and when employees learn hard, they exert more effort to learn (learning effort). Task effort and learning effort are important causes of improved performance. This thesis investigates whether the use of tournament schemes motivates employees to work harder and learn harder, and also whether providing performance feedback in tournament schemes has any impact on task effort and learning effort.This thesis has three goals. The first is to investigate the relationship between incentives, learning, and performance. The literature on whether learning interacts with incentives to improve performance is inconclusive, because no prior research has provided a good test of this question (as noted by Bonner and Sprinkle 2002; Bailey and Fessler 2011; Bailey et al. 1998, and as remains true today). The second goal is to investigate the motivational effect of tournament schemes on effort. The literature suggests that effort is difficult to observe directly or to quantify; as a result, it is hard to verify whether tournament schemes motivate employees' task effort and learning effort. This thesis uses an eye-tracking device to measure effort, by measuring eye position, eye movements, and pupil size. The third goal is to investigate the effect of performance feedback on task effort, learning effort, and performance in the tournament setting.I posit and show evidence that both task effort and learning effort are higher in multiple-winner schemes than in either winner-takes-all schemes or piece-rate schemes. Task effort is directly positively associated with performance, while learning effort causes learning transfer to a job task, also yielding a positive effect on performance. I find that providing relative performance feedback in the tournament setting has no significant impact on task effort or learning effort.These findings have practical value for many corporations, which are constantly re-evaluating the effectiveness of their incentive schemes and reporting systems while investing in learning initiatives to help employees transfer learned skills to job tasks. Organizations may use the insights of this thesis to help them design learning initiatives and motivate employees to transfer learned skills to their job tasks.
Author : Mercer, LLC
Publisher : John Wiley & Sons
ISBN 13 : 047047811X
Total Pages : 288 pages
Book Rating : 4.4/5 (74 download)
Download or read book Pay for Results written by Mercer, LLC and published by John Wiley & Sons. This book was released on 2009-03-17 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt: The numerous incentive approaches and combinations and their implications can be dizzying even to the compensation professional. Pay for Results provides a road map for developing and implementing executive incentives that drive business needs and strategy. It is filled with specific analytic tools, including tables, exhibits, forms, checklists. In addition, it uncovers myths in performance measurement strategy and design. Timely and thorough, this book expertly shows businesses how to drive their specific needs and strategy. Human resources and compensation officers will discover how to apply performance metrics that align with shareholder investment.
Author : J. Carr Bettis
Publisher :
ISBN 13 :
Total Pages : 80 pages
Book Rating : 4.:/5 (13 download)
Download or read book The Presence, Value, and Incentive Properties of Relative Performance Evaluation in Executive Compensation Contracts written by J. Carr Bettis and published by . This book was released on 2014 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data that includes specific contractual details of Relative Performance Evaluation (RPE) contracts granted to executives for 1,833 firms for the period 1998 to 2012, we develop new methods to characterize RPE awards and measure their value and incentive properties. The frequency in the use of these awards has grown over time with 37% of the firms in our sample granting an RPE award in 2012. When RPE awards are used they are typically granted to the five named executive officers and they represent about 32% of total recipient compensation. Stock is most frequently the instrument conveyed, followed by cash, and options are almost never granted. RPE awards are more likely to be used at firms with diversified business lines, less concentrated industries, greater exposure to systematic risk, larger size, lower M/B, higher dividend yield, fewer insiders on the board, greater institutional ownership, and that engage a compensation consultant. The typical award is a rank-order tournament based on three year stock returns compared to a select group of 13 peers (median) and is paid out with stock. Payout functions typically include regions of concavity, convexity, explicit inelasticity, and implicit inelasticity. The median firm achieves a threshold for at least some payout of stock or cash about 70% of the time and target payout about 50% of the time. In general, RPE grant value differs significantly from the fair market value reported by firms. We find that RPE awards convey to executives the incentive to increase shareholder wealth. RPE awards of stock contingent on either stock or accounting performance and RPE awards of cash contingent on accounting performance convey the incentive to increase firm risk, while RPE cash awards do not. These incentives can be significant in comparison to those conveyed by APE grants with similar attributes.
Author : Junichiro Ishida
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Team Incentives Under Relative Performance Evaluation written by Junichiro Ishida and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the optimal provision of incentives in the repeated setting with many agents under the restriction that only relative performance evaluation is feasible for contracting. We show that the optimal contract in the repeated setting may take a different form than that in the static setting. In the repeated setting, it may be optimal for the principal to arbitrarily divide the agents into teams and compensate them based on team ranking, as it allows the principal to motivate the agents through peer sanctions. The situation draws a clear contrast to the static setting where such a strategy is never optimal. The result indicates that the concept of team plays an important role in the repeated setting even when performances can only be evaluated in relative terms.
Author : E. Glenn Dutcher
Publisher :
ISBN 13 :
Total Pages : 39 pages
Book Rating : 4.:/5 (853 download)
Download or read book Strive to be first or avoid being last : an experiment on relative performance incentives written by E. Glenn Dutcher and published by . This book was released on 2013 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Raj Aggarwal
Publisher :
ISBN 13 :
Total Pages : 90 pages
Book Rating : 4.:/5 (318 download)
Download or read book Executive Compensation, Strategic Competition, and Relative Performance Evaluation written by Raj Aggarwal and published by . This book was released on 1996 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: We argue that strategic interactions between firms in an oligopoly can explain the puzzling lack of high-powered incentives in executive compensation contracts written by shareholders whose objective is to maximize the value of their shares. We derive the optimal compensation contracts for managers and demonstrate that the use of high-powered incentives will be limited by the need to soften product market competition. In particular, when managers can be compensated based on their own and their rivals' performance, we show that there will be an inverse relationship between the magnitude of high-powered incentives and the degree of competition in the industry. More competitive industries are characterized by weaker pay-performance incentives. Empirically, we find strong evidence of this inverse relationship in the compensation of executives in the United States. Our econometric results are not consistent with alternative theories of the effect of competition on executive compensation. We conclude that strategic considerations can preclude the use of high-powered incentives, in contrast to the predictions of the standard principal-agent model.
Author : Timothy Michael Keune
Publisher :
ISBN 13 :
Total Pages : 178 pages
Book Rating : 4.:/5 (733 download)
Download or read book Essays on the Design and Consequences of Relative Performance Evaluation Incentives in CEO Compensation Contracts written by Timothy Michael Keune and published by . This book was released on 2010 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Oded STARK
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (119 download)
Download or read book A RELATIVE DEPRIVATION APPROACH TO PERFORMANCE INCENTIVES IN CAREER GAMES AND OTHER CONTENTS written by Oded STARK and published by . This book was released on 1988 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Xiandeng Jiang
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (13 download)
Download or read book Relative Performance Prizes and Dynamic Incentives in Best-of-N Contests written by Xiandeng Jiang and published by . This book was released on 2017 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper introduces a relative performance prize scheme to best-of-N contests. We develop a theoretical model of the best-of-N contest with intermediate prizes distributed based on the players' relative performance. The model predicts that a relative performance prize scheme both increases the players' level of effort in certain conditions and decreases performance differential between the winner and the loser in the contest. Empirically, we investigate these theoretical predictions employing a natural experiment of FIVB (Fédération Internationale de Volleyball) World League and FIVB World Grand Prix. The results indicate that the introduction of a relative performance scheme induces contest participants to intensify their efforts; however, this prize scheme ultimately results in teams playing fewer sets in the match.
Author : Oded Stark
Publisher :
ISBN 13 :
Total Pages : 24 pages
Book Rating : 4.:/5 (189 download)
Download or read book A Relative Deprivation Approach to Performance Incentives in Career Games and Other Contests written by Oded Stark and published by . This book was released on 1988 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Konstantinos Tzioumis
Publisher :
ISBN 13 :
Total Pages : 308 pages
Book Rating : 4.:/5 (94 download)
Download or read book Essays on managerial incentives written by Konstantinos Tzioumis and published by . This book was released on 2005 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt:
