O. (Olga) Khalina

Rotterdam School of Management (RSM)
Erasmus University Rotterdam
ERIM Doctoral Student
Field: Finance & Accounting
Affiliated since 2007

PhD Project

Executive compensation narratives

Executive compensation is one of the most hotly debated issues in both the financial press and the academic literature. Agency theory predicts that making executive pay more sensitive to firm performance helps to align the interests of managers with those of shareholders (Jensen and Meckling, 1976).  However, Bebchuck and Fried (2004) argue that current compensation levels are better explained by managerial rent-seeking. One remedy against rent-seeking behavior lies in more transparent disclosure about executive pay policy. Recently, US companies have to disclose a comprehensive narrative discussion and analysis of compensation entitled “Compensation Discussion & Analysis” or CD&A. The first project examines the relation between corporate characteristics and executive compensation disclosures. Which companies are more likely to disclose more information? What determines the quality of CD&A disclosure? The second project examines whether the quality of CD&A disclosure is related to pressure from the press or active institutional shareholders. Do active shareholders or news coverage that voice concerns about executive pay lead to better CD&A disclosure?  Do strong corporate governance structures help to design executive compensation packages that are more in line with shareholders’ interests? The third project deals with relative performance evaluation and stock option plan design. The CD&A also allows us to investigate to which extent companies use relative performance targets that need to be met before options can be exercised. Do companies with more ambitious performance targets perform better? Do more independent compensation committees set more difficult to achieve target performance levels? Does the use of relative performance evaluation help to mitigate the dark side of options such as earnings management?

Keywords
Compensation Discussion & Analysis; Management Discussion & Analysis; IFRS; executive compensation; stock options; accounting narratives
Time frame
2007 -

Address

Visiting address

Office: Mandeville Building FLEX
Burgemeester Oudlaan 50
3062 PA Rotterdam

Postal address

Postbus 1738
3000 DR Rotterdam
Netherlands

Supervisory team

Olga Khalina
Gerard Mertens
Professor of Financial Analysis
Promotor
Olga Khalina
Professor of Entrepreneurial Finance and Private Equity
Promotor