My theoretical research on CEO compensation aims to construct rich models that capture the complexity of the CEO’s job, but are at the same time tractable and transparent, making both the economic intuition and empirical implications clear. These models have shown, for example, that CEOs should be paid with debt as well as equity, that the vesting period of a CEO’s equity should extend beyond his tenure, and the optimal measure of incentives is the CEO’s dollar equity stake in the firm scaled by annual pay. My empirical work shows how short-term incentives affect CEO behavior.

Surveys:

  • 2009 brief, non-technical survey of theories (Edmans, Gabaix EFM 2009)
  • 2016 comprehensive survey of theories, with unifying model (Edmans, Gabaix JEL 2016)
  • 2017 comprehensive survey of theories and evidence, with lots of stylized facts, charts, and tables (Edmans, Gabaix, Jenter Handbook 2017)

Theory:

Empirics