Download or read book Executive Compensation Best Practices written by Frederick D. Lipman and published by John Wiley & Sons. This book was released on 2008-06-27 with total page 336 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive Compensation Best Practices demystifies the topic of executive compensation, with a hands-on guide providing comprehensive compensation guidance for all members of the board. Essential reading for board members, CEOs, and senior human resources leaders from companies of every size, this book is the most authoritative reference on executive compensation.

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 The Complete Guide to Executive Compensation 3 E written by Bruce R. Ellig and published by McGraw Hill Professional. This book was released on 2014-01-17 with total page 1021 pages. Available in PDF, EPUB and Kindle. Book excerpt: The definitive guide for anyone involved in designing and approving executive salaries—revised for new laws and attitudes about salaries and performance The Complete Guide to Executive Compensation, Third Edition, helps you evaluate your company’s culture, organization, and strategy to create the best compensation package for the organization’s interest. It contains new strategies based on recent changes regarding venture capitalism, boards of director’s core responsibilities, changes in director’s pay, shifts in stakeholder power, and laws like the Dodd-Frank Wall Street Reform and Consumer Protection Act and healthcare reform. Bruce R. Ellig served at Pfizer Inc. for over 35 years, and spent his last 25 years as secretary of the Board of Directors' Executive Compensation Committee. He has received the Lifetime Achievement Awards from the Society of Human Resource Management and WorldatWork. Ellig was elected to the National Academy of Human Resources in 1993 and served as a fellow of the Employee Benefit Research Institute and the Wharton Aresty Institute.

Download or read book Optimal Executive Compensation written by Chongwoo Choe and published by . This book was released on 1999 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies optimal managerial contracts in two different contracting environments. When contracts can be based on earnings, an optimal contract is interpreted as a combination of base salary, golden parachute and bonus. When earnings are not verifiable, two types of optimal contracts are derived: a contract with restricted stock ownership, and a contract with stock options. These three types of optimal contracts are payoff-equivalent in a strong sense: agents' ex ante and ex post payoffs are the same under all three contracts. This suggests that the choice of contractual form is irrelevant in the environment studied in this paper. Comparative static analyses of optimal contracts generate several testable hypotheses.

Download or read book Optimal Executive Compensation when Firm Size Follows Geometric Brownian Motion written by Zhiguo He and published by . This book was released on 2007 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes optimal executive compensation by studying a continuous-time agency model where the agent controls the drift of the geometric Brownian motion firm size. In contrast to existing agency models with constant firm size setting, in our model the changing firm size generates partial incentives, analogous to awarding the agent equity shares according to her continuation payoff. Along the optimal path, necessary additional incentives are provided by the optimal contract. When the agent is as patient as investors, performance-based stock grants implement the optimal contract; we also characterize the optimal contracting with shirking for this case. Our model generates a leverage effect on the firm's equity returns, and implies that the agency problem is more severe for smaller firms. That the empirical evidence pertaining to grants-performance sensitivity shows that CEO compensation is largely based on historical performance - rather than current performance - lends support to our model.

Download or read book An Introduction to Executive Compensation written by Steven Balsam and published by Academic Press. This book was released on 2002 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt: General readers have no idea why people should care about what executives are paid and why they are paid the way they are. That's the reason that The Wall Street Journal, Fortune, Forbes, and other popular and practitioner publications have regular coverage on them. This book not only proposes a reason - executives need incentives in order to maximize firm value (economists call this agency theory) - it also describes the nature and design of executive compensation practices. Those incentives can take the form of benefits (salary, stock options), or prerquisites (reflecting the status of the executive within the organizational culture.

Download or read book The Complete Guide to Executive Compensation written by Bruce R. Ellig and published by McGraw-Hill Companies. This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Offering guidance to board members and company executives; this book provides in-depth coverage of current issues and trends in designing and administering executive compensation packages that are strategically; economically; and culturally sound. --

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 The Complete Guide to Executive Compensation written by Bruce R. Ellig and published by McGraw Hill Professional. This book was released on 2007-07-16 with total page 809 pages. Available in PDF, EPUB and Kindle. Book excerpt: ANSWERS TO EXCESSIVE EXECUTIVE PAY Charges of excessive executive compensation have filled the business press for a number of years, yet few understand why pay plans trigger such results.This desktop reference book is an easy-to-access, invaluable guide to structuring appropriate executive pay plans. Properly used, it will help avoid excessive executive pay resulting from poorly designed plans. Written by renowned compensation expert Bruce Ellig, this book is a must read for the designers, approvers, and recipients of executive compensation, as well as those who write about the subject. Consultants and in-house pay designers will find detailed examples (supplemented with over 400 figures and tables) to trigger their own creativity. Compensation committees and other approvers of executive pay plans will value the definitions and descriptions of various pay plans and the conditions under which they would be appropriate. Executives themselves will find the book useful. Not only in better understanding their own plans, but learning more about other plans, both those they may only have heard about, as well as many that have not yet caught their attention. And those who write about the subject will be able to put their comments in a better perspective.. The Complete Guide to Executive Compensation takes an in-depth look at each of the executive pay elements: salary, executive benefits and incentives (both short and long term). This review also includes the role of the board of directors (and its compensation committee) along with the influence of the major stakeholders (most notably the shareholder). And a complete chapter is devoted to various measurements of executive performance. This book also contains a compendium of selected key information on executive compensation, including laws, Internal Revenue Code sections, IRS revenue rulings, accounting interpretations, and SEC actions. No other book has such a complete resource section. In addition, it includes both a historical review of key developments and a look ahead, as well as a glossary with more than 2,000 definitions.

Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by DIANE Publishing. This book was released on 2010-08 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. Examines how the opportunity to manipulate affects the optimal pay contract, and establishes necessary and sufficient conditions under which earnings management occurs. The author¿s model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations. Charts and tables.

Download or read book Search for Optimal CEO Compensation written by Melanie Cao and published by . This book was released on 2013 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Much of the agency literature focuses on effort-inducing while little attention is paid to the participation constraint. Intuitively, it is important to jointly address both for CEOs. This paper achieves this by developing a dynamic search equilibrium model which allows for quitting if a CEO is not satisfied with the incentive contract. The reservation utility is endogenized in equilibrium since the value of the CEO's outside option depends on other firms' contracts. As a result, the equilibrium incentive contract exhibits some new and important features which can explain two long-standing puzzles related to the executive compensation practice. First, the equilibrium pay-to-performance-sensitivity negatively depends on the expected aggregate state and a firm's systematic risk, and positively on the firm's specific risk. The separate effects of firms' systematic and specific risks enable us to reconcile the mixed evidence on the relationship between pay-to-performance sensitivity and a firm's risk. Second, the equilibrium salary and total pay depend on the firm's size, which, in turn, increases with the expected aggregate state. This result provides a plausible explanation to the steadily increased compensation paid to executives in the past three decades. These theoretical predictions are broadly supported by our empirical results. Hence, we conclude that the participation constraint is an important determinant for the executive compensation policy.

Download or read book The Handbook of the Economics of Corporate Governance written by Benjamin Hermalin and published by Elsevier. This book was released on 2017-09-18 with total page 762 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward

Download or read book Executive Compensation in America written by Lucian A. Bebchuk and published by . This book was released on 2001 with total page 109 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Executive Compensation written by Raghavendra Rau and published by . This book was released on 2017 with total page 181 pages. Available in PDF, EPUB and Kindle. Book excerpt: The optimal design of executive compensation is one of the primary issues in the area of corporate governance and has been investigated in considerable detail in the academic literature over the past three decades. The underlying assumption behind the design of optimal compensation schemes is that the executives of the firm have more information on the firm's projects and cash flows than the shareholders. In the presence of symmetric information, since the shareholders can completely distinguish the executive's effort from bad luck or other extraneous factors, there is little need to motivate the executive beyond a flat salary. In the presence of asymmetric information, the shareholder faces two problems: One, to select the right type of agent (the adverse selection problem) and two, to motivate the agent to work hard once selected (the moral hazard problem). All executive compensation schemes represent trade-offs between these two agency problems. In this survey, in the first section, I start by discussing the theory of executive compensation. Why do firms pay executives? I distinguish two major approaches. The first arises from the theory of optimal compensation contracting and focuses on the composition of pay. It argues that the composition of pay is set to attract good executives (to solve the adverse selection problem) and motivate them to work hard (the moral hazard problem). The second approach focuses on the level of pay. It argues that managers have a considerable degree of power in setting their own wages, and in particular, use their power to extract excessive pay or rents from the shareholders. In the second section, I discuss the evidence on both the composition and level of pay and how it has changed over time, treating each component pay separately. I also discuss the composition of pay in countries around the world and in specific industries. In the third section, I describe who decides pay composition and levels. Finally, in the fourth section, I conclude by examining how the structure of pay has real consequences for firms.

Download or read book Optimal Executive Compensation vs Managerial Power written by Michael S. Weisbach and published by . This book was released on 2010 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: This essay reviews Bebchuk and Fried's Pay without Performance: The Unfulfilled Promise of Executive Compensation. Bebchuk and Fried criticize the standard view of executive compensation, in which executives negotiate contracts with shareholders that provide incentives that motivate them to maximize the shareholders' welfare. In contrast, Bebchuk and Fried argue that executive compensation is more consistent with executives who control their own boards, and who maximize their own compensation subject to an outrage constraint. They provide a host of evidence consistent with this alternative viewpoint. The book can be evaluated from both a positive and a normative perspective. From a positive perspective, much of the evidence they present, especially about the camouflage and risk-taking aspects of executive compensation systems, is fairly persuasive. However, from a normative perspective, the book conveys the idea that policy changes can dramatically improve executive compensation systems and consequently overall corporate performance. It is unclear to me how effective in practice are potential reforms designed to achieve such changes likely to be.

Download or read book Explaining Executive Pay written by Lukas Hengartner and published by Springer Science & Business Media. This book was released on 2007-12-31 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: Lukas Hengartner shows that both firm complexity and managerial power are associated with higher pay levels. This suggests that top managers are paid for the complexity of their job and that more powerful top managers receive pay in excess of the level that would be optimal for shareholders.

Download or read book Sticks or Carrots Optimal CEO Compensation when Managers are Loss Averse written by Ingolf Dittmann and published by . This book was released on 2010 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes optimal executive compensation contracts when managers are loss averse. We calibrate a stylized principal-agent model to the observed contracts of 595 CEOs and show that this model can explain observed option holdings and high base salaries remarkably well for a range of parametrizations. We also derive and calibrate the general shape of the optimal contract that is increasing and convex for medium and high outcomes and drops discontinuously to the lowest possible payout for low outcomes. We identify the critical features of the loss-aversion model that render optimal contracts convex.