Performance Periods in CEO Performance-Based Equity Awards: Theory and Evidence
研究了CEO绩效股权奖励中绩效期的长度，发现短期绩效期有助于筛选CEO才能，尤其适用于低预期生产率或高外部机会的CEO，以及高经营不确定性的企业。
ABSTRACT: This paper examines the length of time over which CEO performance is evaluated (the “performance period”) in CEO performance-based equity awards (PBEAs). Departing from the primary emphasis of agency theory on moral hazard problems, we develop a model in which short performance periods are instrumental in sorting CEO talents. The model predicts that short performance periods are preferred when CEOs have low expected productivity or valuable alternative employment opportunities, and when firms face high operating uncertainty or high dispersion of managerial productivity. We find empirical support for these predictions in a sample of S&P 1500 industrial firms granting PBEAs to CEOs. We also document that CEO turnover is higher for underperforming CEOs with shorter performance periods, validating the sorting role of performance periods.