Lucas Davis, Catherine Hausman, 18 January 2019

Rises and falls in oil prices impact the macroeconomy, the stock market, investment, and of course the value of oil and gas firms. What happens to the fortunes of the leaders of those oil and gas firms? This column argues that the compensation of US oil and gas executives is closely tied to oil prices – much more closely than economic theory would predict. Theory says that executives should be rewarded for the value they bring to a firm, and that they should be incentivised to take the best actions on behalf of the firm. With billions of dollars at stake each year, boards and shareholders may want to revisit how compensation is structured at these firms.

Events

CEPR Policy Research