Download or read book Executive Stock Option Valuation Under Multiple Severance Risks written by Gurupdesh S. Pandher and published by . This book was released on 2011 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive stock option (ESO) grants have a number of important features that do not conform with the Black-Scholes model. This paper presents a risk-neutral model for valuing such options where the holder is exposed to multiple severance risks (e.g. termination with cause, without cause, mortality) with varying cause-contingent ex-severance payoffs and stock holding restrictions. We find that Black-Scholes significantly overestimates the cost of ESOs to the firm (e.g. 28-39% for a severance rate of 5%) and the bias is inversely related to volatility. For valuation, we construct a multi-severance binomial ESO (MSB-ESO) model and identify the corresponding multi-severance partial differential equation. The severance event is modeled using a flexible doubly stochastic Poisson process which permits rich information structures between state variables and the severance event to be endogenously captured in the valuation.

Download or read book The Journal of Derivatives written by and published by . This book was released on 2003 with total page 664 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Executive Stock Options and Leverage written by Lee W. Sanning and published by . This book was released on 2003 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive stock options as a form of managerial compensation have come under intense scrutiny in recent months. Agency theory has held that options granted to executives should resolve some conflicts between managers and stockholders (Jensen and Meckling, 1976, and Haugen and Senbet, 1981). Yet recent events highlight the additional and perverse incentives that executive stock options can create. The role that executive options may have played in the collapse of firms like Enron is currently being debated in the popular press as well as by legislators and regulatory officials. Testifying before congress, Alan Greenspan recently said quot;there has been a severance, in my judgment, of the interests of the chief executive officer in many corporations from those of the shareholdersquot; (February 27, 2002). This severance can lead to risk taking by the corporate manager, beyond that preferred by the shareholders. One such type of risk taking is the increased use of financial leverage. Prior empirical research documents a positive contemporaneous relationships between executive options and leverage. These studies argue that executive options induce risk taking on the part of the manager and so interpret this finding as an indication that higher option grants cause higher leverage. I explicitly test for a causal relationship between executive options and leverage. I find that executive options cause financial risk taking when there is low institutional monitoring (ownership). However, for high institutional ownership, I find that this is not the case. Rather, following increases in firm risk (leverage), managers are granted additional stock options, consistent with optimal contracting and the empirical predictions of Choe (2001) and, more generally, the asset substitution hypothesis of Meyers (1977). Taken together, these results suggest that for some firms, the use of executive option may be efficient from the standpoint of shareholders.

Download or read book The Valuation of Executive Stock Options that Incorporate Reset Provisions written by John Joseph Stansfield and published by . This book was released on 1996 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation investigates the effects of a variety of parameters on the value of Executive Stock Options (ESOs) in a 20-period binomial setting. There are eight parameters: the vesting schedule, reset policy, maturity, employee risk aversion, the degree of non-option wealth, volatility, and the expected return on the underlying shares. The results indicate that many of the parameters previously thought to have dramatic impacts on ESO value (e.g. risk aversion) tend to not have a very large impact once reasonable estimates are used for the degree of non-option wealth. The contribution to the literature is two-fold. First, it entails clarifying the role non-option wealth plays in determining the level of risk aversion displayed by employees. Second, it entails modeling the effects of the reset provision on the value of executive stock options, which until now has escaped notice. In light of the findings of this research, FASB's recommendation to use currently available option pricing methodology such as the Black-Scholes model to estimate the fair value of an ESO grant is likely to yield conservative results.

Download or read book Executive Stock Options and Stock Appreciation Rights written by Herbert Kraus and published by Law Journal Press. This book was released on 2023-12-28 with total page 870 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive Stock Options and Stock Appreciation Rights will guide you through such vital topics as: types of stock options available, including nonqualified and incentive stock options.

Download or read book Too Much Is Not Enough written by Robert W. Kolb and published by Oxford University Press. This book was released on 2012-08-02 with total page 428 pages. Available in PDF, EPUB and Kindle. Book excerpt: The scholarly literature on executive compensation is vast. As such, this literature provides an unparalleled resource for studying the interaction between the setting of incentives (or the attempted setting of incentives) and the behavior that is actually adduced. From this literature, there are several reasons for believing that one can set incentives in executive compensation with a high rate of success in guiding CEO behavior, and one might expect CEO compensation to be a textbook example of the successful use of incentives. Also, as executive compensation has been studied intensively in the academic literature, we might also expect the success of incentive compensation to be well-documented. Historically, however, this has been very far from the case. In Too Much Is Not Enough, Robert W. Kolb studies the performance of incentives in executive compensation across many dimensions of CEO performance. The book begins with an overview of incentives and unintended consequences. Then it focuses on the theory of incentives as applied to compensation generally, and as applied to executive compensation particularly. Subsequent chapters explore different facets of executive compensation and assess the evidence on how well incentive compensation performs in each arena. The book concludes with a final chapter that provides an overall assessment of the value of incentives in guiding executive behavior. In it, Kolb argues that incentive compensation for executives is so problematic and so prone to error that the social value of giving huge incentive compensation packages is likely to be negative on balance. In focusing on incentives, the book provides a much sought-after resource, for while there are a number of books on executive compensation, none focuses specifically on incentives. Given the recent fervor over executive compensation, this unique but logical perspective will garner much interest. And while the literature being considered and evaluated is technical, the book is written in a non-mathematical way accessible to any college-educated reader.

Download or read book Perspectives on Regulation of Systemic Risk in the Financial Services Industry written by United States. Congress. House. Committee on Financial Services and published by . This book was released on 2009 with total page 192 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Pay Without Performance written by Lucian A. Bebchuk and published by Harvard University Press. This book was released on 2004 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.

Download or read book Managing Human Resources in North America written by Steve Werner and published by Routledge. This book was released on 2012-08-21 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: This unique text covers the key issues in North American human resources today. Providing an overview of new and emerging issues in North American Human Resource Management (HRM), the chapters are divided into three parts. The first part examines how changes in the business environment have affected HRM; the second part looks at topics that have escalated in importance over the last few years; and the third analyzes topics that have recently emerged as concerns. Each chapter is authored by a leading figure in the field and features case vignettes to provide practical illustrations of the points in hand. The chapters also conclude with guidelines to help HR professionals deal with the issues raised. A Companion Website featuring online lecturer and student resources is available for this text and can be visited at www.routledge.com/textbooks/0415396867. Managing Human Resources in North America is a core text for current issues in HRM courses in North America and a supplementary text for students studying international HRM in other countries. It will be invaluable reading for all those studying HRM in North America or currently working in the field.

Download or read book The Complete Guide to Human Resources and the Law written by Dana Shilling and published by Wolters Kluwer Law & Business. This book was released on 2023 with total page 1936 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Research Handbook on Executive Pay written by John S. Beasley and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 553 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on executive compensation has exploded in recent years, and this volume of specially commissioned essays brings the reader up-to-date on all of the latest developments in the field. Leading corporate governance scholars from a range of countries set out their views on four main areas of executive compensation: the history and theory of executive compensation, the structure of executive pay, corporate governance and executive compensation, and international perspectives on executive pay. The authors analyze the two dominant theoretical approaches – managerial power theory and optimal contracting theory – and examine their impact on executive pay levels and the practices of concentrated and dispersed share ownership in corporations. The effectiveness of government regulation of executive pay and international executive pay practices in Australia, the US, Europe, China, India and Japan are also discussed. A timely study of a controversial topic, the Handbook will be an essential resource for students, scholars and practitioners of law, finance, business and accounting.

Download or read book Risk Finance and Asset Pricing written by Charles S. Tapiero and published by John Wiley & Sons. This book was released on 2010-09-24 with total page 530 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive guide to financial engineering that stresses real-world applications Financial engineering expert Charles S. Tapiero has his finger on the pulse of shifts coming to financial engineering and its applications. With an eye toward the future, he has crafted a comprehensive and accessible book for practitioners and students of Financial Engineering that emphasizes an intuitive approach to financial and quantitative foundations in financial and risk engineering. The book covers the theory from a practitioner perspective and applies it to a variety of real-world problems. Examines the cornerstone of the explosive growth in markets worldwide Presents important financial engineering techniques to price, hedge, and manage risks in general Author heads the largest financial engineering program in the world Author Charles Tapiero wrote the seminal work Risk and Financial Management.

Download or read book Complete Guide to Human Resources and the Law 2019 Edition written by Shilling and published by Wolters Kluwer. This book was released on 2018-09-14 with total page 1830 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Complete Guide to Human Resources and the Law will help you navigate complex and potentially costly Human Resources issues. You'll know what to do (and what not to do) to avoid costly mistakes or oversights, confront HR problems - legally and effectively - and understand the rules. The Complete Guide to Human Resources and the Law offers fast, dependable, plain English legal guidance for HR-related situations from ADA accommodation, diversity training, and privacy issues to hiring and termination, employee benefit plans, compensation, and recordkeeping. It brings you the most up-to-date information as well as practical tips and checklists in a well-organized, easy-to-use resource. The 2019 Edition provides new and expanded coverage of issues such as: The Supreme Court held in March 2016 that to prove damages in an Fair Labor Standards Act (FLSA) donning/doffing class action, an expert witness' testimony could be admitted Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016). Executive Order 13706, signed on Labor Day 2015, takes effect in 2017. It requires federal contractors to allow employees to accrue at least one hour of paid sick leave for every 30 hours they work, and unused sick leave can be carried over from year to year. Mid-2016 DOL regulations make millions more white-collar employees eligible for overtime pay, by greatly increasing the salary threshold for the white-collar exemption. Updates on the PATH Act (Protecting Americans From Tax Hikes; Pub. L. No. 114-113. The DOL published the "fiduciary rule" in final form in April 2016, with full compliance scheduled for January 1, 2018. The rule makes it clear that brokers who are paid to offer guidance on retirement accounts and Individual Retirement Arrangements (IRAs) are fiduciaries. In early 2016, the Equal Employment Opportunity Commission (EEOC) announced it would allow charging parties to request copies of the employer's position statement in response to the charge. The Supreme Court ruled that, in constructive discharge timing requirements run from the date the employee gives notice of his or her resignation--not the effective date of the resignation. Certiorari was granted to determine if the Federal Arbitration Act (FAA) preempts consideration of severing provisions for unconscionability. Previous Edition: Complete Guide to Human Resources and the Law, 2018 Edition ISBN 9781454884309

Download or read book Complete Guide to Human Resources and the Law 2020 Edition written by Shilling and published by Wolters Kluwer. This book was released on 2019-08-23 with total page 1878 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Complete Guide to Human Resources and the Law will help you navigate complex and potentially costly Human Resources issues. You'll know what to do (and what not to do) to avoid costly mistakes or oversights, confront HR problems - legally and effectively - and understand the rules. The Complete Guide to Human Resources and the Law offers fast, dependable, plain English legal guidance for HR-related situations from ADA accommodation, diversity training, and privacy issues to hiring and termination, employee benefit plans, compensation, and recordkeeping. It brings you the most up-to-date information as well as practical tips and checklists in a well-organized, easy-to-use resource. Previous Edition: Complete Guide to Human Resources and the Law, 2018 Edition ISBN 9781454899945

Download or read book Corporate Governance after the Financial Crisis written by Stephen M. Bainbridge and published by Oxford University Press. This book was released on 2012-01-25 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first decade of the new millennium was bookended by two major economic crises. The bursting of the dotcom bubble and the extended bear market of 2000 to 2002 prompted Congress to pass the Sarbanes-Oxley Act, which was directed at core aspects of corporate governance. At the end of the decade came the bursting of the housing bubble, followed by a severe credit crunch, and the worst economic downturn in decades. In response, Congress passed the Dodd-Frank Act, which changed vast swathes of financial regulation. Among these changes were a number of significant corporate governance reforms. Corporate Governance after the Financial Crisis asks two questions about these changes. First, are they a good idea that will improve corporate governance? Second, what do they tell us about the relative merits of the federal government and the states as sources of corporate governance regulation? Traditionally, corporate law was the province of the states. Today, however, the federal government is increasingly engaged in corporate governance regulation. The changes examined in this work provide a series of case studies in which to explore the question of whether federalization will lead to better outcomes. The author analyzes these changes in the context of corporate governance, executive compensation, corporate fraud and disclosure, shareholder activism, corporate democracy, and declining US capital market competitiveness.

Download or read book TARP and Executive Compensation Restrictions written by United States. Congressional Oversight Panel and published by . This book was released on 2010 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Markets and Compensation for Executives in Europe written by Lars Oxelheim and published by Emerald Group Publishing. This book was released on 2008-05-15 with total page 441 pages. Available in PDF, EPUB and Kindle. Book excerpt: The increasing amounts of money paid out in compensation to corporate executives have become the subject of a heated public policy debate on both sides of the Atlantic. This book covers a wide range of issues, including: corporate law and regulation in the area of corporate governance; and, prosperity and growth effects of compensation contracts.