Gian Luca Clementi and Thomas F. Cooley have a new paper on executive compensation on behalf of the NBER:
In this paper we describe the important features of executive compensation in the US from 1993 to 2006. Some confirm what has been found for earlier periods and some are novel. Important facts about compensation are that: the compensation distribution is highly skewed; each year, a sizeable fraction of chief executives lose money; the use of equity grants has increased; the income accruing to CEOs from the sale of stock has increased; regardless of the measure we adopt, compensation responds strongly to innovations in shareholder wealth; measured as dollar changes in compensation, incentives have strengthened over time, measured as percentage changes in wealth, they have not changed in any appreciable way.
In their conclusion, the authors write:
When one looks at compensation and its components in detail, a number of features stand out. To start with, the distribution of total compensation is highly skewed so averages are highly misleading. The dispersion of the cross–sectional distribution is also remarkable. In every single year, a large fraction of CEOs lose money. Sometimes, they lose a lot.