The prevalence of pay based on risky firm outcomes for nonexecutive workers presents a puzzling departure from conventional contract theory, which predicts insurance provision by the firm. When workers at the same firm compete against each other for promotions, the optimal contract features pay based on firm outcomes as insurance against promotion risk. The model's predictions are consistent with many observed phenomena, such as performance-based vesting and overvaluation of equity pay by nonexecutive workers. It also generates novel predictions linking a firm's hierarchy to its workers' pay structure.

中文翻译：

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公司绩效工资作为晋升风险的保险


非执行员工普遍根据公司的风险结果支付薪酬，这与传统的合同理论（预测公司提供的保险）存在令人费解的背离。当同一家公司的员工相互竞争晋升时，最优合同的特点是根据公司业绩支付报酬，作为防范晋升风险的保险。该模型的预测与许多观察到的现象一致，例如基于绩效的归属和非高管员工股权薪酬的高估。它还产生新颖的预测，将公司的等级制度与其工人的薪酬结构联系起来。