ditional QR reveal considerable differences in the impact of CEO stockbased
pay on profitability in firms across different levels of profitability.
Figure 1 depicts the QR estimates of the stock-based/total compensation
variable and its 95 per cent confidence intervals. Figure 1 also shows the
corresponding OLS estimate for comparison. Importantly, the OLS estimate
is just a single measurement of the relationship between CEO stockbased
pay and performance, and focuses only on the averaging behavior,
without considering that the impact of the stock-based/total compensation
variable on performance can differ for the extreme RoE regions.