Management Practice Insights
DOI: 10.59571/mpi.v4i2.1
Year: 2026, Volume: 4, Issue: 2, Pages: 73-79
Original Article
Anurag Guptai*, Allan Zebedeeii
iWeatherhead School of Management, Case Western Reserve University
iiReh School of Business, Clarkson University
*Corresponding author
Email: [email protected]
Received Date:28 May 2025, Accepted Date:09 September 2026, Published Date:30 September 2026
benchmarks, variable compensation, and aligning incentives with the company’s stock: this seems like a no-regret move, right? Yet, in far too many cases, CEO pay has not correlated well with the performance of the companies they lead. There are also concerns that their compensation, driven largely by equity, has become disproportionately and inequitably high relative to that of other employees. This raises questions about the measures used to determine CEO compensation and the governance process by which it is approved. To address the concerns, by Pierre Chaigneau, Alex Edmans, and Daniel Gottlieb makes a case for performance-vesting equity, where rewards are earned only after company performance crosses preset thresholds.1 They suggest this compensation model “can induce effort for free” because CEOs are motivated by being fairly rewarded for the value they create, rather than by what others receive. However, its effectiveness depends heavily on board oversight, the performance measures used, and the size of the equity grants themselves. We identify the contexts in which performance-vesting equity may be effective and the various pitfalls that limit its effectiveness
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20 Berkshire Hathaway Inc, ‘Current Report (Form 8-K)’, U.S. Securities and Exchange Commission, 2026, https://www.sec.gov/Archives/edgar/data/1067983/000119312526344495/d159922d8k.htm. Berkshire Hathaway Inc. Warner Bros CEO to Pocket up to $887
© 2026 Published by SPJIMR. This is an open-access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/)
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