The Daily Stat from Harvard Business Review

 

January 21, 2015 More-Optimistic CEOs Get Less Total Pay For CEOs, a 1-standard-deviation increase in a particular measure of optimism is associated with 2% lower total compensation, says Clemens A. Otto of HEC Paris. Drawing on data from U.S. firms, Otto shows that CEOs whose behavior (in exercising options and forecasting earnings) indicates high optimism receive smaller stock-option grants and fewer bonus payments than their peers, possibly because their rosy expectations for their future earnings preclude demands for higher compensation. Although optimistic chief executives cost the corporation less in terms of compensation, they may be costly in other ways, such as through misguided investments, Otto suggests. SOURCE: CEO optimism and incentive compensation

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