CEO incentive plans improvement in the U.S. public companies on the base of game theoretical modeling

Abstract

The paper is aimed at improving the mechanism of forming the variable part of CEO compensation. The novelty of the given research paper is improving the methodology of evaluation the value of variable part of CEO compensation with the chosen model, so it can be applied on practice. The model is game theoretical interpretation of the principal-agent phenomenon whose objective is to model the variable part of CEO compensation to stimulate strategy implementation In detail, 14 company cases of the U.S. public companies in retail and technology industries were presented, the applicability of the model was proven and suggestions for methodology improvement were made.