Equity Pay Beyond the C-suite

Equity pay has become increasingly common over the last several decades but the differences in the level of equity pay across firms are very large. This study documents the inequality in equity pay across firms and describes the drivers of firm-level differences in equity pay policies. We show that firm-level equity pay is very persistent, and a large fraction of the differences across firms in equity pay comes from differences in initial values. Some of the differences in initial values can be attributed to differences across firms' financial constraints and to substantial peer effects. We show that high equity pay firms manage equity pay most actively, in particular counteracting the effects of stock price gains and losses. High-equity pay firms tend to be younger, and to experience subsequently higher employment growth. We also compare equity pay beyond the C-Suite to CEO equity pay and show that CEOs' equity pay is much less persistent, and is actually lower at younger firms and firms that experience higher employment growth. We argue that equity pay is both a compensation and a capital structure decision, and draw out these parallels.