Publication: Executive compensation and share holdings in spanish firms: analysis and valuation of incentives
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Date
2022-01-17
Authors
Advisor
Gómez López, Juan Pedro
Court
Markarian, Garen (PRESIDENTE);
Bonet, Rocio (SECRETARIO);
Monjas Barroso, MANUEL (VOCAL);
Feriozzi, Fabio (VOCAL);
Gallardo Olmedo, Fernando (VOCAL)
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IE University
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Abstract
This Dissertation analyzes executive compensation and incentives in Spanish listed companies between 2013 and 2017 using regulated reports (IAGCs & IARCs) that disclose executive share holdings and compensation plans in great detail. The research of this Dissertation is divided into the following areas: i. Analysis of CEO Compensation Plan Design and Share Holdings. CEO compensation design in Spanish firms is characterized by the relevance of the short-term bonus (which represent 35% of total estimated remuneration on average) and the little use of restricted shares and stock options. Besides compensation incentives, CEOs in Spanish firms have an additional incentive that arises from their private investment in firm’s shares, which on average represents 155% of CEOs’ total estimated remuneration. ii. Relation between CEO Incentives and Firm Performance. I found evidence of a weak relationship between CEO incentives and firm performance (this result refers to companies where the CEO is not a member of the founding family). On average, CEOs receive 0.49 euros for each one thousand euro increase in shareholder value. This result is lower than the 3.25 dollars obtained by Jensen & Murphy (1990), lower than the 25.11 dollars obtained by Hall & Liebman (1998) and higher than the 0.14 euros obtained by Gomez (2019). Most of the relationship between CEO incentives and firm performance corresponds to the private portfolio incentive, which highlights the importance of this incentive when studying executive compensation in Spanish firms. iii. Employee Stock Option Valuation Model (ESOVM). This Dissertation develops a financial model to value employee stock options that incorporates their early exercise character into the calculations. The Employee Stock Option Valuation Model developed in this Dissertation is much more accurate than the Black-Scholes-Merton formula in determining the value of employee stock options. The deviation between both models may reach 75% of the option value.
Unesco subjects
Finanzas y Seguros
Organización de Recursos Humanos
Organización de Recursos Humanos
License
Attribution 4.0 International
School
IE Business School
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Citation
Argibay, E. J. B. (2022). Retribución de ejecutivos y participación accionarial en las empresas españolas: análisis y valoración de incentivos (Doctoral dissertation, IE Universidad).