Patricia Kotnik is an Assistant Professor at the FELU. She holds a Ph.D. in economics from the FELU. Her main research interests include entrepreneurship, firm-level innovation activities and the impact of ICT use. In the field of public policy analysis, her interests include industrial policy, specifically innovation and entrepreneurship policy. She is a member of a research program group, financed by the Slovenian Research Agency, focusing on competitiveness, innovativeness, efficiency and sustainable development of Slovenian economy. Recently, she has participated in two EU-funded international research projects: a Horizon 2020 project “ISIGrowth” (Innovation-fuelled, Sustainable, Inclusive Growth); and the ESSLait project (ESSnet on linking of micro-data to Analyze ICT Impact, assessing economic impact of ICT).
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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