Mustafa Erdem Sakinç is assistant professor of economics at Université Paris 13 and a researcher at Centre d’Economie de l’Université Paris Nord. He is also senior researcher of the Academic-Industry Research Network a.k.a. theAIRnet. He received his Ph.D. in economics from University of Bordeaux in 2016. His main research focus is the interactions between business strategies, corporate governance, corporate finance and industrial relations that specify contrasting and converging corporate practices in the US and Europe. He is specialized in aerospace, pharmaceutical and ICT industries. He worked as a researcher for several national and international research projects including FINNOV and ISIGrowth which were funded by Framework Programmes of European Commission. He continues to contribute several other research projects headed by theAIRnet.
Mustafa Erdem Sakinç
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In Europe and the United States, stock-based compensation discourages long-term corporate sustainability
This paper adds to the empirical evidence on the extent to which stock-based pay incentivizes and rewards European corporate executives. It shows that the actual realized gains (that is, take-home compensation) from stock-based pay of CEOs in European publicly-listed firms may be underestimated by the use of “estimated fair value” measures. The paper also documents the heterogeneity among countries in terms of the levels and components of CEO take-home pay. We base our work on a sample of 301 large, publicly-traded companies listed in the S&P Europe 350 index from 11 EU countries: Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden and United Kingdom for the fiscal year 2015. Through analyzing companies’ annual reports, we have hand-collected data on various elements of compensation of the company’s CEO in 2015, including the gains that executives realize from stock-based pay. We document that on average half of the total compensation of the European CEOs in our sample is stock-based, measured by actual realized gains, with large differences among countries. Although in some European countries the majority of total compensation is stock-based, the proportions are still well below those that prevail in the
Price gouging in the US pharmaceutical drug industry goes back more than three decades.