SOURCE: Federal Reserve Bank of Richmond

Federal Reserve Bank of Richmond

October 10, 2014 09:55 ET

Richmond Fed's Economic Quarterly Explores Executive Compensation Packages

RICHMOND, VA--(Marketwired - Oct 10, 2014) - The first step in understanding the incentives provided to CEOs of large public firms is to measure their compensation accurately. In the latest issue of Economic Quarterly, Richmond Fed economist Arantxa Jarque and research assistant John Muth use the available data to construct a measure of annual income that is based on realized compensation, rather than on the expected value of stock and option grants. They discuss the limitations of the available data required to construct this measure, and compare it to other measures recently used in the literature. They also propose a counterfactual exercise to project what annual income for CEOs would have been in different performance scenarios for their firm and present their estimates of annual income and its sensitivity to performance for the period from 1993 to 2012, with a particular focus on the financial industry since the 2007-2008 financial crisis.

You can find the full text of this article and others in the latest issue of Economic Quarterly on our website.

Also in this issue:

  • The Business Cycle Behavior of Working Capital by Felipe Schwartzman
  • Pecuniary Externalities, Segregated Exchanges, and Market Liquidity in a Diamond-Dybvig Economy with Retrade by Borys Grochulski

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. For more information, contact the Federal Reserve Bank of Richmond's Research Department - Publications at 800.322.0565 or visit

The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.

Contact Information

  • Contacts:
    John Weinberg
    Director of Research
    Federal Reserve Bank of Richmond

    Amanda Kramer
    Managing Editor
    Federal Reserve Bank of Richmond Economic Quarterly
    Email Contact