Share Repurchases, Equity Issuances, and the Optimal Design of Executive Pay

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Title:	Share Repurchases, Equity Issuances, and the Optimal Design of Executive Pay
Author:	Fried, Jesse M.
Citation:	Jesse M. Fried, Share Repurchases, Equity Issuances, and the Optimal Design of Executive Pay, 89 Texas Law Review 1113 (2011).
Full Text & Related Files:	fried].pdf (553.5Kb; PDF)
Abstract:	This Article identifies a cost to public investors of tying executive pay to the future value of a firm’s stock - even its long-term value. In particular, such an arrangement can incentivize executives to engage in share repurchases (when the current stock price is low) and equity issuances (when the current stock price is high) that reduce “aggregate shareholder value,” the amount of value flowing to all the firm’s shareholders over time. The Article also puts forward a mechanism that ties executive pay to aggregate shareholder value and thereby eliminates the identified distortions.
Other Sources:	http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1845620 http://www.texaslrev.com/issues/vol/89/issue/5/fried
Terms of Use:	This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page:	http://nrs.harvard.edu/urn-3:HUL.InstRepos:4905394