Whether CEOs and other senior executives are too highly compensated is one of the most publicized and divisive issues in corporate governance. In this paper, we address this question not by asking whether executives are paid more than the value they create, but by asking whether firms could pay executives less money without reducing quality, thus retaining more money for shareholders, by using a better negotiation strategy. The focus of our attention is a particular feature of how CEO compensation – and the compensation of some other high level employees – is often determined, although rarely discussed: the firm first decides which candidate it prefers, and only then negotiates the amount of compensation with the desired candidate. We hypothesize that this approach to negotiation, which we call “choose first, negotiate second,” is inferior to its alternative, which we call “negotiate first, choose second,” or “N1C2.” We explain the theoretical basis for this hypothesis and then present the results of an experiment we conducted to test it. We conclude by suggesting a number of possible explanations for firms’ failure to take advantage of what we consider to be a superior negotiating strategy.

中文翻译：

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与CEO讨价还价：“先谈判，后选择”的案例

CEO 和其他高级管理人员的薪酬是否过高是公司治理中最广为人知和分歧最大的问题之一。在本文中，我们不是通过询问高管的薪酬是否高于他们创造的价值来解决这个问题，而是通过询问公司是否可以在不降低质量的情况下向高管支付更少的钱，从而通过使用更好的谈判策略为股东保留更多的钱。我们关注的焦点是 CEO 的薪酬——以及其他一些高级员工的薪酬——通常是如何确定的，尽管很少讨论：公司首先决定它喜欢哪个候选人，然后才与他们协商薪酬数额。所需的候选人。我们假设这种谈判方法，我们称之为“选择第一，第二谈判，”不如它的替代方案，我们称之为“首先谈判，然后选择”或“N1C2”。我们解释了这个假设的理论基础，然后展示了我们进行的测试结果。最后，我们对公司未能利用我们认为是优越的谈判策略提出了一些可能的解释。