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

Abstract

The goal of the research paper is to improve mechanism of CEO incentive plans development in the U.S. public companies using appropriate game theoretical modeling. The tasks of the study are: select and improve the game theoretical model for optimal compensation contract construction based on literature review analysis; analyze CEO compensation value and structure on example of the U.S. public companies in specific industries; test theoretical methodology to evaluate value of CEO incentive plans based on case studies analysis; formulate recommendations for CEO incentive plans improvement. As the main result of the study we proved applicability of theoretical methodology to evaluate the magnitude and timing of incentive awards granting based on several case studies from retail and technology industries. The tested mechanism introduced reputation as an important non-monetary factor of influence on manager’s efforts application. Moreover, we formulated methodology how to apply the applied procedure to evaluate incentive plan value and give advisory recommendations about strategy amendments in U.S. public companies.