Economic Policy Review

Executive Equity Compensation and Incentives: A Survey

April 2003Volume 9, Number 1
JEL classification: G32, G34, J33, M41

Authors: John E. Core, Wayne R. Guay, and David F. Larcker

Stock and option compensation and the level of managerial equity incentives are aspects of corporate governance that are especially controversial to shareholders, institutional activists, and governmental regulators. Similar to much of the corporate finance and corporate governance literature, research on stock-based compensation and incentives has generated not only useful insights, but also has produced many contradictory findings. Not surprisingly, many fundamental questions remain unanswered. In this article, the authors synthesize the broad literature on equity-based compensation and executive incentives, and highlight topics that seem especially appropriate for future research.

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