Exchange Rate and Macroeconomic Fluctuations as Sources of Luck in CEO Compensation

6533b7d4fe1ef96bd1262641

RESEARCH PRODUCT

Exchange Rate and Macroeconomic Fluctuations as Sources of Luck in CEO Compensation

Hsin-hui Chiu Lars Oxelheim Lars Oxelheim Lars Oxelheim Clas Wihlborg Clas Wihlborg Jianhua Zhang

subject

Incentive Current compensation Exchange rate Executive compensation Luck media_common.quotation_subject Remuneration Economics Monetary economics Salary media_common Compensation (engineering)

description

Exchange rate and other macroeconomic fluctuations can be considered sources of good or bad “luck” for corporate performance. Incentive effects of performance-based compensation for management may be weakened or biased by macroeconomic influences on remuneration depending on the ability of management to adjust operations. We decompose the changes in CEO-compensation to distinguish between (anticipated-and unanticipated) macroeconomic and “intrinsic” sources. Total US CEO-compensation is measured both including options awarded and options exercised. Both depend strongly on variations in macro-factors but the time patterns differ. Allowing for asymmetric effects on compensation we find that current compensation (salary bonus) has the most positive asymmetry.

year	journal	country	edition	language
2011-01-01	SSRN Electronic Journal

https://doi.org/10.2139/ssrn.1928959

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