Explicit Relative Performance Evaluation in Performance-Vested Equity Grants

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dc.contributor.authorCarter, Mary Ellen
dc.contributor.authorIttner, Christopher D
dc.contributor.authorZechman, Sarah L. C.
dc.date2023-05-17T14:16:00.000
dc.date.accessioned2023-05-22T11:49:13Z
dc.date.available2023-05-22T11:49:13Z
dc.date.issued2009-09-01
dc.date.submitted2016-05-26T09:03:13-07:00
dc.description.abstractUsing data from FTSE 350 firms, we examine factors influencing explicit relative performance evaluation (RPE) conditions in performance-vested equity grants. We provide exploratory evidence on whether the use or characteristics of RPE are associated with efforts to improve incentives by removing common risk, other economic factors discussed in the RPE literature, or external pressure to implement RPE. We find that many of these economic factors, including common risk reduction, are more closely related to specific relative performance conditions than to the firm-level decision to use RPE in some or all of their equity grants. We also find that greater external monitoring by institutional investors or others is associated with plans with tougher overall RPE conditions. The relative performance conditions are binding in most RPE plans, with nearly two-thirds of the grants vesting only partially or not vesting at all. Further, we find evidence that vesting percentages vary in RPE and non-RPE plans.
dc.identifier.urihttps://repository.upenn.edu/handle/20.500.14332/1137
dc.legacy.articleid1042
dc.legacy.fields10.1007/s11142-009-9085-8
dc.legacy.fulltexturlhttps://repository.upenn.edu/cgi/viewcontent.cgi?article=1042&context=accounting_papers&unstamped=1
dc.source.beginpage269
dc.source.endpage306
dc.source.issue88
dc.source.issue2
dc.source.journalAccounting Papers
dc.source.journaltitleReview of Accounting Studies
dc.source.peerreviewedtrue
dc.source.statuspublished
dc.source.volume14
dc.subject.otherrestricted stock grant
dc.subject.otherequity plan
dc.subject.otherdividend playout ratio
dc.subject.otherstock option grant
dc.subject.othercompensation risk
dc.subject.otherRPE
dc.subject.otherequity-based pay
dc.subject.otherdividend yield
dc.subject.otherexecutive compensation contract
dc.subject.otherequity incentive
dc.subject.otherinstitutional investor
dc.subject.otherstock return volatility
dc.subject.otherLondon stock exchange
dc.subject.otherstock market performance
dc.subject.othershare price performance
dc.subject.otherAccounting
dc.titleExplicit Relative Performance Evaluation in Performance-Vested Equity Grants
dc.typeArticle
digcom.identifieraccounting_papers/88
digcom.identifier.contextkey8653619
digcom.identifier.submissionpathaccounting_papers/88
digcom.typearticle
dspace.entity.typePublication
upenn.schoolDepartmentCenterAccounting Papers
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