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Is a Higher Calling Enough? Incentive Compensation in the Church

Authors: Yermack, David
Issue Date: 2-Feb-2009
Series/Report no.: FIN-08-015
Abstract: We study the compensation and productivity of more than 2,000 Methodist ministers in a 43-year panel data set. The church appears to use pay-for-performance incentives for its clergy, as their compensation follows a sharing rule by which pastors receive approximately 3 percent of the incremental revenue from membership increases. The elasticity between ministers’ pay and parish size is similar to the firm size elasticity of compensation for public company CEOs. Among a range of possible performance measures, those with the greatest informativeness about pastoral effort are linked most closely to compensation.
Appears in Collections:Finance Working Papers

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