Bonus payments, hierarchy levels and tenure: Theoretical considerations and empirical evidence

Arbeitspapier

Using data on executive compensation for the German chemical industry, we investigate the relevance of two theoretical approaches that focus on bonuses as part of a long term wage policy of a firm. The first approach argues that explicit bonuses serve as substitutes for implicit career concerns. The second approach claims that bonuses are used as complements to an executive's internal career. Our data show that bonus payments are mostly prevalent among senior executives at higher hierarchy levels and rather for management jobs than for jobs in research and development. This is true for the whole chemical sector as well as for single large corporations. The findings indicate that the two theoretical views are not mutually exclusive, but are both relevant in practice.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5284

Classification and Topics

• Classification: Wirtschaft ; Personnel Economics: Compensation and Compensation Methods and Their Effects ; Compensation Packages; Payment Methods
• Subject: bonus payments ; chemical sector ; hierarchy ; tenure ; wage policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grund, Christian ; Kräkel, Matthias
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/46110
• Last update: 10.03.2025, 11:42 AM CET