Journal of Accounting and Economics Vol. 66 No. 1 2018
Performance-vesting provisions in executive compensation
Abstract
The usage of performance-vesting (p-v) equity awards to top executives in large U.S. companies has grown from 20 to 70 percent from 1998 to 2012. We measure the effects of p-v provisions on value, delta, and vega of equity-based compensation. We find large differences in the value of p-v awards reported in company disclosures versus economic value. We also find that equity-based grants continue to convey significant compensation convexity (vega) after ASC 718 (2005) and that, counter to recent claims in the literature, our analysis empirically reaffirms the presence of a causal relation between compensation convexity (vega) and firm risk.
- DOI
- 10.1016/j.jacceco.2018.05.001
- Volume
- 66
- Issue
- 1
- Pages
- 194-221
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref