R&D Horizon and CEO Compensation

Abstract

本研究探討研發投資的效用年限對高階主管獎酬之影響，研究結果顯示高階主管獎酬契約的設計會將研發投資的效用年限納入考慮。首先，本研究發現研發效用年限較長的公司，傾向於向上調整CEO的現金獎酬與研發支出變動的關聯性，以避免CEO的現金獎酬受到研發支出對盈餘有負面效果之影響，並補償CEO因為研發投資所面臨之風險增加；同時，也增加股票選擇權的獎酬與研發支出的敏感度以促使CEO將研發支出投入在較佳的研發案上。另一方面，研發效用年限較短的公司在決定CEO獎酬時，傾向於將研發支出當作費用。此外，結果顯示，當研發的效用年限較長時，CEO獎酬對會計績效的敏感度降低，說明了研發的效用年限降低了會計報酬率在績效衡量上的適當性。最後，本研究發現對新任的CEO，獎酬委員會增強研發效用年限與CEO獎酬對研發支出敏感度之影響，以鼓勵面臨高度不確定性的新上任CEO投資於具長期性質的研發支出，並降低研發效用年限與CEO獎酬對會計報酬率的敏感度之關連，因為繼任CEO任期中早期階段的會計績效很可能反映的是前任CEO對研發的投入。

This study investigates the impact of the long-lived nature of R&D investment on CEO compensation, and provides evidence that the R&D horizon is contract-relevant. First, this study documents that firms with a longer R&D payoff period tend to adjust the association between CEO cash compensation and changes in R&D expenditures upward to shield CEO cash compensation from the negative earnings impact of R&D expenses as well as to provide compensation for the risks embedded in such R&D investment, while increasing option compensation to induce R&D investment in good projects. On the other hand, firms with a short R&D payoff period tend to treat R&D expenditures as an expense when rewarding CEOs. In addition, the results show that CEO compensation is less sensitive to accounting returns when R&D has a longer horizon, suggesting that the R&D horizon reduces the desirability of accounting return as a performance measure. Finally, I find that, for new CEOs, compensation committees tend to strengthen the association between R&D horizon and the sensitivity of CEO compensation to R&D expenditure in order to encourage new CEOs to invest in long-lived R&D and reduce the association between R&D horizon and the sensitivity of CEO cash compensation to accounting returns since accounting performance in the earlier stage of the successor`s tenure is more likely to reflect the R&D effort of the predecessor CEO when R&D has a long horizon.