That’s the premise of a new paper from the Energy Institute at Haas, which looks at the link between executive pay and oil prices. Building on a 2001 paper that found a tight link between oil prices and executive compensation, the recently published paper from Lucas W. Davis and Catherine Hausman finds that the trend has only become more pronounced in the intervening years. Typically, corporate executives are rewarded for the strong performance of their companies. This “pay-for-performance” model incentivizes CEOs to maximize company value. But in the oil and gas industry, much of a company’s value is determined by the price of oil, which is entirely outside of management’s control. In addition, while there is other literature out there on the possible links between luck and executive pay, the energy industry offers a very interesting example because luck can be parsed out in a clearer way. Unlike other […]