Economic analysis of executive compensation in large companies.

Summary This thesis has three main contributions. The first one focuses on the compensation of CEOs of CAC40 companies and uses a competitive model to explain the empirically observed differences. The effect of a possible cap on CEO compensation on "equilibrium" is studied. The results show that it is necessary, in order to reproduce the adequate dispersion of French CEOs' incomes, to consider a more dispersed distribution of talent than in the United States. On the other hand, a cap will only have a positive impact for the representative shareholder if it is set at a high level. The second contribution focuses on the recent development of "golden parachutes". The influence of taxation and of the legal environment are studied through a corporate finance model. The increase in CEO turnover and the use of severance payments are explained as the result of legislative changes aimed at improving corporate governance. This chapter makes the link between the quality of corporate governance and the optimal taxation of such severance payments. The third contribution concerns the forms that DMP contracts can take. The model developed allows for the increased competition in the executive market and in the goods market, as well as the priority given by firms to shareholder value. These developments combined have encouraged the use of more flexible contracts and the widespread practice of benchmarking.