Document Type

Thesis or dissertation

Date of this Version



Erik Gilje


Studies have shown that there is asymmetry in how sensitive CEO compensation is to lucky factors (factors beyond management’s control) depending on if they increase or decrease the company’s market capitalization. This study surveys compensation asymmetry within the exploration and production industry due to its susceptibility to the lucky factor of commodity price. The study finds that compensation asymmetry in the E&P industry is more extreme than the broader market. In the broader market, previous studies have found that a CEO’s compensation becomes less sensitive to luck in years of bad luck relative to years of good luck. The directional relationship remains the same. In the E&P industry, however, the directional relationship of this sensitivity reverses in bad luck years, and an E&P CEO’s total compensation actually increases when market capitalization decreases due to luck. The driving factor of this enhanced asymmetry are likely abundant external job market opportunities.


Compensation, energy, pay for luck, asymmetry, CEO



Date Posted: 26 June 2018


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