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• Teaching Note | HBS Case Collection | February 2018 (Revised March 2020)

  Signet Jewelers: Assessing Customer Financing Risk

  Gerardo Pérez Cavazos, Suraj Srinivasan and Quinn Pitcher

  Teaching Note for HBS No. 117-038.

  Citation:

  Pérez Cavazos, Gerardo, Suraj Srinivasan, and Quinn Pitcher. "Signet Jewelers: Assessing Customer Financing Risk." Harvard Business School Teaching Note 118-067, February 2018. (Revised March 2020.)  View Details

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• Article | Management Science | February 2020

  Effects of a Tournament Incentive Plan Incorporating Managerial Discretion in a Geographically Dispersed Organization

  Carolyn Deller and Tatiana Sandino

  Using retail chain data, we study the effects of a tournament incentive plan based primarily on objective performance, but incorporating managerial discretion in the selection of winners. In principle, such plans could motivate employees to perform both at a high level, based on objective criteria, and in accordance with company values, considered via managerial discretion. However, such plans could be counterproductive if enough participants (especially those who don’t win) perceive that subjectivity (introduced via discretion) adds unfairness. We show that, on average, the tournament incentive plan was associated with improved store sales. We also find that such plans can be more beneficial for geographically distant participants, where the potential for improving alignment is greater. Lastly, we find some evidence that participants’ resource constraints (potentially affecting unfairness concerns) can impact outcomes under the plan.

  Keywords: tournaments; subjectivity; Motivation and Incentives; Fairness; Performance Improvement; Geographic Location;

  Citation:

  Deller, Carolyn, and Tatiana Sandino. "Effects of a Tournament Incentive Plan Incorporating Managerial Discretion in a Geographically Dispersed Organization." Management Science 66, no. 2 (February 2020): 911–931.  View Details

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• Article | Accounting Review | January 2020

  Compensation Consultants and the Level, Composition, and Complexity of CEO Pay

  Kevin J. Murphy and Tatiana Sandino

  We provide fresh evidence regarding the relation between compensation consultants and CEO pay. First, firms that employ consultants have higher-paid CEOs—this result is robust to firm fixed effects and matching on economic and governance variables. Second, while this relation is partly due to consultant conflicts of interest, it is largely explained by the impact consultants have on the composition and complexity of CEO pay plans; notably, this impact fully mediates the consultant-CEO pay relation. Third, firms with higher-paid CEOs and more complex pay plans are more likely to hire a consultant. Lastly, say-on-pay voting patterns suggest shareholders view positively the advice consultants provide but only when consultants do not provide other services. We also find suggestive evidence of boards “layering” new equity incentive plans over existing ones, thereby increasing the impact of composition and complexity on CEO pay beyond the premium the CEO would demand for bearing additional compensation risk.

  Keywords: Consultants; benchmarking; Incentive Pay; Executive Compensation; Complexity; Motivation and Incentives; Governance;

  Citation:

  Murphy, Kevin J., and Tatiana Sandino. "Compensation Consultants and the Level, Composition, and Complexity of CEO Pay." Accounting Review 95, no. 1 (January 2020): 311–341.  View Details

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