Journal of Sports Science and Human Performance
Pay for Performance: CEOs vs Baseball Players
Abstract
Stephen F. O'Byrne
Corporate boards and baseball team owners face some common challenges in managing pay. Both try to create strong incentives for outstanding performance. Both have to balance their desire for strong incentives with the need to retain key talent and control cost. Boards and team owners also have some key differences. Boards make extensive use of equity compensation to tie CEO pay to stock value, while team owners are largely restricted to cash payments that are set before the season begins. Boards are often accused of being too dependent on their CEO and lacking the will to negotiate at arms’ length, while team owners are rarely accused of lacking the will to negotiate at arms’ length.