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dc.contributor.authorPinto, Helena*
dc.contributor.authorWiddicks, M.*
dc.date.accessioned2016-05-27T11:59:57Z
dc.date.available2016-05-27T11:59:57Z
dc.date.issued2014-12
dc.identifier.citationPinto H and Widdicks M (2014). Do compensation plans with performance targets provide better incentives? Journal of Corporate Finance, 29: 662–694.en_US
dc.identifier.urihttp://hdl.handle.net/10454/8409
dc.descriptionYesen_US
dc.description.abstractGuided by academic literature, industry practice and policy recommendations, we analyze a wide range of option and restricted stock plans with exercise and vesting conditions that may be contingent on stock price performance. To assess the effectiveness of these plans at attracting and providing incentives to executives, we create compensation plans with fixed firm cost and executive valuation and calculate their expected total lifetime incentives. We show that performance vesting targets provide the least cost effective incentives, performance exercise targets provide the largest risk incentives, option plans are generally superior to restricted stock plans, and calendar vesting is only efficient up to a maximum of three years. Performance exercise targets can increase the expected total lifetime incentives provided by compensation plans, but in general, standard options with short vesting periods provide the most cost effective pay-for-performance incentives.en_US
dc.language.isoenen_US
dc.relation.isreferencedbyhttp://dx.doi.org/10.1016/j.jcorpfin.2014.03.005en_US
dc.rights© 2014 Elsevier. Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/en_US
dc.subjectExecutive compensation; Performance target plans; Incentives; Restricted stock; Optionsen_US
dc.titleDo compensation plans with performance targets provide better incentives?en_US
dc.status.refereedYesen_US
dc.date.Accepted2014-03-23
dc.date.application2014-03-29
dc.typeArticleen_US
dc.type.versionAccepted manuscripten_US
refterms.dateFOA2018-07-25T12:23:15Z


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