We examine whether the potential for costly sabotage is a deterrent to firms' use of relative performance evaluation (“RPE”) in CEO pay plans. We exploit illegal cartel membership as a source of variation in the potential for costly sabotage and document that firms are more likely to use RPE if they are currently cartel members. Moreover, firms frequently drop RPE from their CEOs’ pay plans immediately after their cartels are detected, dissolved and punished. We further provide suggestive evidence that the potential for costly sabotage explains these patterns; cartel membership severs the empirical association between RPE and competitive aggression.

我们研究了代价高昂的破坏的可能性是否会阻碍公司在首席执行官薪酬计划中使用相对绩效评估（“RPE”）。我们利用非法卡特尔成员身份作为潜在的代价高昂的破坏的变化来源，并记录了如果公司目前是卡特尔成员，则更有可能使用 RPE。此外，公司经常在其卡特尔被发现、解散和受到惩罚后立即将 RPE 从首席执行官的薪酬计划中剔除。我们进一步提供了暗示性证据，表明代价高昂的破坏的可能性解释了这些模式；卡特尔成员资格切断了 RPE 与竞争性攻击之间的实证关联。