One in seven big U.S. companies pays its CEO zero stock, sticking entirely to cash and a fixed salary.
March 19, 2026
Original Paper
Zero-Equity CEO Pay
SSRN · 6435882
The Takeaway
Modern corporate logic assumes that CEOs must be paid in stock to align their interests with shareholders. This finding reveals that for a significant portion of firms—especially smaller and riskier ones—this 'alignment' theory is abandoned in favor of safer, cash-based compensation.
From the abstract
Contrary to standard agency theory, one in seven U.S. public firms grants CEOs zero-equity pay (ZEP) in a given year. We examine ZEP as a constrained outcome of the trade-offs between the economic costs and benefits of equity grants. ZEP is persistent and more prevalent among younger, smaller, and riskier firms, but less common among S&P 1500 firms and those with greater media and analyst coverage. In ZEP years, compensation shifts toward safer, cash-based pay, while performance and pay-for-perf