Lower Salaries and No Options – On the Optimal Structure of Executive Pay

This ZIP file provides interested readers with additional materials on the paper “Lower Salaries and No Options – On the Optimal Structure of Executive Pay” by Ingolf Dittmann and Ernst Maug.

Savings This is an Excel-sheet with the savings variable defined in the paper. These are the savings the firm could realize from switching from the observed contract to the contract with non-negative options (our base case, see Section III.A) implied by program (16). The dataset contains 5,659 observations from 1,525 U.S. firms over the years 1997 to 2004. The dataset contains 5 variables: the company name (coname), the year (year), the absolute savings (savings_abs, in thousand dollars), the savings relative to the CEO's total compensation costs (savings_rel_pay), and the savings relative to firm value (savings_rel_firm). The variables in the dataset are:

Savings_abs	The savings from recontracting in thousand dollars
Savings_rel_pay	The savings from recontracting relative to the CEO's total compensation costs
Savings_rel_firm	The savings from recontracting relative to the value of the firm
CONAME	The name of the company in Compustat ExecuComp
year	The year of the contract

Implementation This technical note explains some of the derivations used in the paper.

Taxes This technical note explains the calculations for the tax system in Section VI.A of the paper.