ABSTRACT When determining new equity grants, corporate boards face a tradeoff between the CEO’s incentives generated from the grant’s duration versus those arising from the convexity of the embedded equity risk. We hypothesize and find that boards lengthen the horizon of new compensation grants in the presence of greater pre-existing compensation sensitivity to stock return volatility (vega). In addition, consistent with our hypothesis, we find stronger results in the presence of greater left-tail risk. Further, employing two exogenous shocks to left-tail risk, we provide evidence consistent with our hypothesis that grant horizons are related to risk incentives. Our analysis of the interaction of these two incentive mechanisms provides new insights on compensation contracting. JEL Classifications: J33; M52.

中文翻译：

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CEO 承担风险的激励措施和薪酬期限


摘要在确定新的股权授予时，公司董事会面临着对首席执行官因授予期限而产生的激励与因嵌入股权风险的凸性而产生的激励之间的权衡。我们假设并发现，在现有薪酬对股票回报波动性 (vega) 的敏感性更大的情况下，董事会会延长新薪酬补助的期限。此外，与我们的假设一致，我们发现在存在更大的左尾风险的情况下会产生更强的结果。此外，通过对左尾风险采用两种外生冲击，我们提供了与我们的假设一致的证据，即拨款期限与风险激励相关。我们对这两种激励机制相互作用的分析为薪酬契约提供了新的见解。 JEL 分类：J33； M52。