Performance-based pay : sharing prosperity and misery.
This paper discusses the risk transfer effect and wealth transfer effect of three types of firm-wide cash performance-based pay plans - the incentive pay plan, the pay-at-risk plan, and the pure misery-sharing plan. The valuation models for each type of performance-based pay plan are developed to qu...
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| Format: | Research Report |
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2008
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| Online Access: | http://hdl.handle.net/10356/7040 |
| _version_ | 1811686368802242560 |
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| author | Low, Buen Sin. |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Low, Buen Sin. |
| author_sort | Low, Buen Sin. |
| collection | NTU |
| description | This paper discusses the risk transfer effect and wealth transfer effect of three types of firm-wide cash performance-based pay plans - the incentive pay plan, the pay-at-risk plan, and the pure misery-sharing plan. The valuation models for each type of performance-based pay plan are developed to quantify their wealth transfer effect between shareholders and employees. The models also suggest that there is a risk transfer effect from employees to the shareholders for all three types of performance-based pay. This risk transfer effect is larger for firms that have a higher financial leverage or have a more volatile business environment. |
| first_indexed | 2024-10-01T04:59:19Z |
| format | Research Report |
| id | ntu-10356/7040 |
| institution | Nanyang Technological University |
| last_indexed | 2024-10-01T04:59:19Z |
| publishDate | 2008 |
| record_format | dspace |
| spelling | ntu-10356/70402023-05-19T07:31:16Z Performance-based pay : sharing prosperity and misery. Low, Buen Sin. Nanyang Business School DRNTU::Business This paper discusses the risk transfer effect and wealth transfer effect of three types of firm-wide cash performance-based pay plans - the incentive pay plan, the pay-at-risk plan, and the pure misery-sharing plan. The valuation models for each type of performance-based pay plan are developed to quantify their wealth transfer effect between shareholders and employees. The models also suggest that there is a risk transfer effect from employees to the shareholders for all three types of performance-based pay. This risk transfer effect is larger for firms that have a higher financial leverage or have a more volatile business environment. 2008-09-18T07:28:32Z 2008-09-18T07:28:32Z 2006 2006 Research Report http://hdl.handle.net/10356/7040 Nanyang Technological University application/pdf |
| spellingShingle | DRNTU::Business Low, Buen Sin. Performance-based pay : sharing prosperity and misery. |
| title | Performance-based pay : sharing prosperity and misery. |
| title_full | Performance-based pay : sharing prosperity and misery. |
| title_fullStr | Performance-based pay : sharing prosperity and misery. |
| title_full_unstemmed | Performance-based pay : sharing prosperity and misery. |
| title_short | Performance-based pay : sharing prosperity and misery. |
| title_sort | performance based pay sharing prosperity and misery |
| topic | DRNTU::Business |
| url | http://hdl.handle.net/10356/7040 |
| work_keys_str_mv | AT lowbuensin performancebasedpaysharingprosperityandmisery |