The Choice of Different Types of Subjectivity in CEO Annual Bonus Contracts
研究了董事会评估CEO绩效时两种主观性类型（事后自由裁量奖金和事前主观权重）的不同用途，发现前者用于降低风险，后者用于改善绩效指标与目标的一致性。
ABSTRACT In assessing the performance of the CEO, subjectivity by the board of directors is often present in one form or another. We specifically focus on: (1) the ex ante option to ex post override a formula-based contract (“discretionary bonus”), and (2) the ex ante absence of any formula in a contract (“subjective weights”). We argue that the two types of deviations are driven by different contracting problems, which relate to whether post-contract information does or does not affect the agent's optimal action choice. We refer to these different contracting problems as problems of risk and problems of noncongruity, respectively, and hypothesize that discretionary bonuses are used for risk-reduction purposes, while subjective weights on different performance dimensions are used for congruity-improvement purposes. Our results are consistent with our expectations, showing that the use of the different types of subjectivity is consistent with optimal contracting considerations. Data Availability: All data are publicly available from the sources identified in the text.