1) A union campaign brought executive compensation into the public eye through media coverage, highlighting concerns about high CEO pay.
2) The union's annual awareness campaign aims to build awareness of perceived pay inequities between CEOs and frontline workers, sometimes prompting union formation.
3) The publicity has caused turmoil at Oakwood Lawn, where employees learned their CEO is among the highest paid in the US, despite not receiving a pay increase due to the company's financial challenges.
This Data Spotlight provides data and statistics on the level and structure of CEO compensation in the United States. This data supplements in the issues introduced in the Quick Guides “CEO Compensation” and “Equity Ownership.”
The document discusses CEO remuneration in India and internationally. It notes that average CEO salary in India is Rs. 3.3 million per year, while in the US it is $748,805. The highest paid CEOs in India make over Rs. 50 crore annually. CEO pay includes salary, bonuses, stock options, and other compensation. Boards of directors are responsible for setting CEO pay but there are debates around whether CEOs are overpaid and if high pay is linked to company and stock performance. Transparent reporting of CEO compensation is important for good corporate governance.
Roger Goodell received $29.5 million in total compensation as NFL commissioner in 2011. To analyze if this amount was equitable or excessive, an expert peer group was constructed of large American companies with significant brand equity in the consumer discretionary sector, including media and entertainment firms. Benchmarking against CEO compensation data from these peer companies found that Goodell's compensation placed him between the 42nd and 59th percentiles for total cash compensation and total direct and indirect compensation, suggesting his pay was consistent with market rates for his position.
Take this opportunity to learn about identifying and comparing to your competitors, building commitment and employee engagement and developing a total strategy that supports your organization’s mission and strategic plan.
Our webinar is structured to provide not only education but also useful strategies for addressing the many pressures on executive compensation, wages and salaries. Nonprofits are being scrutinized by the IRS, and executive compensation is a staple of all audits. Nonprofit managers and trustees must prepare for public, media, Form 990, IRS and State scrutiny. Wage and salary programs face a difficult economy as they struggle to attract and retain the best talent with scarce dollars.
This document provides a literature review and analysis of say-on-pay policies around the world. It begins with an introduction on rising CEO pay and the need for increased transparency. Section 1 defines say-on-pay and reviews supporting and opposing literature. Section 2 discusses the UK experience, finding say-on-pay increased pay-performance sensitivity. Section 3 covers the US, where 92% of companies approved pay but boards could ignore dissent. Section 4 briefly outlines other countries' experiences. The conclusion is that say-on-pay may improve transparency and address problems, but more research is needed.
1) A union campaign brought executive compensation into the public eye through media coverage, highlighting concerns about high CEO pay.
2) The union's annual awareness campaign aims to build awareness of perceived pay inequities between CEOs and frontline workers, sometimes prompting union formation.
3) The publicity has caused turmoil at Oakwood Lawn, where employees learned their CEO is among the highest paid in the US, despite not receiving a pay increase due to the company's financial challenges.
This Data Spotlight provides data and statistics on the level and structure of CEO compensation in the United States. This data supplements in the issues introduced in the Quick Guides “CEO Compensation” and “Equity Ownership.”
The document discusses CEO remuneration in India and internationally. It notes that average CEO salary in India is Rs. 3.3 million per year, while in the US it is $748,805. The highest paid CEOs in India make over Rs. 50 crore annually. CEO pay includes salary, bonuses, stock options, and other compensation. Boards of directors are responsible for setting CEO pay but there are debates around whether CEOs are overpaid and if high pay is linked to company and stock performance. Transparent reporting of CEO compensation is important for good corporate governance.
Roger Goodell received $29.5 million in total compensation as NFL commissioner in 2011. To analyze if this amount was equitable or excessive, an expert peer group was constructed of large American companies with significant brand equity in the consumer discretionary sector, including media and entertainment firms. Benchmarking against CEO compensation data from these peer companies found that Goodell's compensation placed him between the 42nd and 59th percentiles for total cash compensation and total direct and indirect compensation, suggesting his pay was consistent with market rates for his position.
Take this opportunity to learn about identifying and comparing to your competitors, building commitment and employee engagement and developing a total strategy that supports your organization’s mission and strategic plan.
Our webinar is structured to provide not only education but also useful strategies for addressing the many pressures on executive compensation, wages and salaries. Nonprofits are being scrutinized by the IRS, and executive compensation is a staple of all audits. Nonprofit managers and trustees must prepare for public, media, Form 990, IRS and State scrutiny. Wage and salary programs face a difficult economy as they struggle to attract and retain the best talent with scarce dollars.
This document provides a literature review and analysis of say-on-pay policies around the world. It begins with an introduction on rising CEO pay and the need for increased transparency. Section 1 defines say-on-pay and reviews supporting and opposing literature. Section 2 discusses the UK experience, finding say-on-pay increased pay-performance sensitivity. Section 3 covers the US, where 92% of companies approved pay but boards could ignore dissent. Section 4 briefly outlines other countries' experiences. The conclusion is that say-on-pay may improve transparency and address problems, but more research is needed.
This document summarizes a dispute over executive compensation at a small engineering services firm with annual revenues under $10 million. The majority owner set their own compensation which was questioned in a 2006 DCAA audit but not resolved until 2011. Key issues included what survey data and job descriptions were appropriate to evaluate compensation reasonableness, what percentile of the survey data should be used, and whether bonuses paid after the fiscal year should be allowed. Lessons learned included the need for a written compensation plan, robust justification of compensation levels, and understanding that audits can take years to resolve.
Contoh Penelitian Tentang Pengaruh Profitabilitas Terhadap Nilai PerusahaanTrisnadi Wijaya
1) The study examines how profitability influences firm value, with capital structure (leverage) as a mediator, and industry type and firm size as moderators.
2) The authors hypothesize that profitability has a positive effect on firm value but a negative effect on leverage. Leverage, in turn, is expected to negatively impact firm value.
3) Industry type and firm size are expected to moderate the relationships between profitability, leverage, and firm value. The study uses data from Taiwanese listed companies to test these hypotheses.
Many people consider executive compensation to be excessive, but is it really? The answer may lay in the eye of the beholder. A thought provoking discussion on the topic.
Presentation slides on the Impact of Dividend policy on firm Performance Neloy Kumar Roy
This document is a presentation on the topic of the impact of dividend policy on firm performance. It was submitted by a student to their professor and covers the following key points:
1. An overview of NCC Bank, including its history and current operations.
2. The objectives of the study, which are to merge practical knowledge with theory and understand the impact of dividend policy on firm performance.
3. Descriptions of the main activities carried out by NCC Bank's general banking, loans and advances, and foreign exchange departments.
4. Discussions of NCC Bank's dividend policy and theoretical frameworks, prior studies on the relationship between dividend policy and financial performance, and the impact of NCC's
The document discusses the controversy around CEO compensation. It notes that while CEOs make strategic decisions that impact company performance, very high compensation can create issues like lack of team performance and loyalty when there is a large gap compared to lower level employees. It suggests that CEO pay should be tied to company performance and layoffs, and that independent committees should set compensation to address these issues. Overall performance depends on both CEO leadership and external factors, so stock price alone can't determine a CEO's contribution. Uniform compensation across industries is impractical given varying company sizes and CEO roles.
The document summarizes research on the impact of "say on pay" votes, which allow shareholders to vote on executive compensation. Studies have found that say on pay has a limited impact. It may reduce egregious pay practices but does little to lower overall pay levels. Say on pay improves dialogue between boards and shareholders but has not been shown to consistently influence pay amounts. While it increases accountability, concerns remain that it could expose companies to activists or make it harder to attract executive talent.
This document discusses executive compensation and lessons learned from past practices. It provides background on compensation of chief executives, particularly in the United States. Key issues discussed include the many parties involved in executive compensation decisions, long-term rewards not tied to performance, and public outrage over large severance packages. The Dodd-Frank Act aimed to increase shareholder input and tie compensation more closely to performance. While reforms addressed some issues, questions still remain around justifying pay gaps and potential unintended consequences of performance-based compensation.
A Study Of Dividend Policy And Its Effect On Market Value Of Shares Of Select...iosrjce
Dividend policy is a strategy used by a company to determine the amount and timing of dividend
payments. The dividend policy framed by an organization is one of the crucial issues in corporate finance since
it may have an impact on the firm’s value and shareholder wealth. The research study is an attempt to analyze
the effect of dividend policy on shareholder wealth of thirty selected Indian banks listed and traded in Bombay
Stock Exchange (BSE).For the purpose of study the financial data from the period 2003-04 to 2012-13 of
selected Indian banks (15 Public and 15 Private) would be used. The data would be analyzed using statistical
tools like multiple regression technique, t test, the coefficient of determination (R2) and F-Value. The results of
the data analysis might reveal that that there is a significant effect of dividend policy on the share price of
selected Indian Banks. The study is limited to a time period of 10 years and only selected Indian Banks. The
result might change if the time period and number of banks are extended.
The document provides information about the Afterschoool Centre for Social Entrepreneurship and its PGPSE program. The PGPSE program is a comprehensive program in social entrepreneurship and spiritual entrepreneurship that aims to develop social entrepreneurs. The program is open to all and available for free online or in-person. It uses case studies and practical lessons from top business schools. The document lists some workshops and flexible specializations offered by the program.
The document discusses key concepts in corporate finance including the goals of maximizing shareholder wealth over time, separation of ownership and management leading to agency issues, and viewing corporate securities as contingent claims on firm value with debt holders having a fixed claim and shareholders receiving residual value. It also examines ways to resolve agency problems through structuring incentives to align manager and shareholder interests such as compensation linked to performance.
The document discusses key concepts in corporate finance including the goals of maximizing shareholder wealth over time, separation of ownership and management leading to agency problems, and using debt and equity as contingent claims on firm value. It also summarizes how boards can help align manager and shareholder interests through incentive structures like stock ownership, pay linked to performance, and the threat of dismissal.
CFA Institute Research Challenge Sterling Financial Corporation (STSA) resear...RyanMHolcomb
Sterling Financial Corporation is a regional bank headquartered in Washington state that was heavily impacted by the financial crisis but has since recovered through recapitalization efforts. The report recommends holding Sterling stock with a price target of $19.46, a 5% increase, citing improving financial trends, a diversified loan portfolio, and growth strategies around loan originations and acquisitions. However, risks remain from economic uncertainty and interest rate pressures on margins.
This document summarizes current trends in association compensation based on survey data from the National Association of Manufacturers Council of Manufacturing Associations (NAM CMA). Key findings include an increase in median operating budgets and CEO compensation levels among survey participants from 2010-2013. The majority of associations provide incentive compensation and defined contribution retirement plans to their CEOs. The document discusses approaches to defining compensation peer groups and using market data to set executive pay levels. It also notes trends toward greater governance and documentation of executive compensation decisions.
How do you determine the right blend of salaries and incentives in your pay strategy? Some believe that paying higher salaries attracts the best people, and therefore improves company performance. Others believe employee earnings should be tied to results, so they emphasize variable pay. So, is one right and the other wrong?
Obviously, there is no universal “right” way to pay employees. Instead, you must find what works best for your organization. So, how do you do that?
That is the question this webinar plans to answer. We will discuss 3 principles for determining the right rewards balance for your company and how they can be used to resolve the higher salary versus bigger incentives dilemma.
Keep calm and carry on - presentation for High Peak CVStonyosailing
The document discusses the challenges facing voluntary organizations in the UK given the economic recession and government funding cuts. It provides statistics on the size of the voluntary sector and effects of the recession, including increased demand for services and decreased donations. The document then discusses the government's "Big Society" initiative and different strategies organizations can take to address challenges, such as downsizing, merging, diversifying activities, or developing new service models. It also shares lessons learned from a case study of two organizations that collaborated to reduce costs while maintaining services.
We find that IPO firms with generously compensated CEOs and large pay disparities between the CEO and other top executives have lower failure rates and longer time to survive in subsequent periods following the offering. Economically, firms with CEO pay (pay gaps) in the 75th percentile have a failure risk that is, on average, 11.56% (13.20%) lower than the failure risk of firms with CEO pay (pay gaps) in the 25th percentile. The relationship between CEO pay and IPO survival is strengthened among firms with lower agency conflicts, whereas the link between pay gap and IPO survival is pronounced among firms with stronger internal promotion incentives. The results are robust to alternative specifications and additional sensitivity tests.
The document summarizes the Spring 2015 Advisory Board meeting of the Architectural Technology Community College of Denver. It discusses topics such as the program vision, curriculum goals, student work, faculty, and strategies to improve enrollment and relevance. Key goals are strengthening sustainable design, BIM, and construction technology education to meet industry needs.
This is the groups winning marketing strategy for our “Natura” product as part of the AAK marketing competition and the module “Marketing”. The presentation received 1st grade.
This document discusses the theory of behaviorism in education. It describes the key proponents of behaviorism including Ivan Pavlov, Edward Thorndike, John Watson, and B.F. Skinner. Pavlov studied classical conditioning through his experiments with dogs. Thorndike proposed the law of effect and connectionism, believing learning occurs through stimulus-response associations that are strengthened by rewards. Watson conducted experiments on conditioning emotional responses. Skinner expanded on operant conditioning, believing that learning is based on changes in behavior from responses to environmental stimuli and reinforcement. The document provides examples of reinforcement and non-reinforcement in behaviorism theory.
The document outlines the agenda and presentation materials for an upcoming board meeting. It includes sections on board business, key business metrics, financial updates, a company overview slide, business progress updates from the CEO and functional teams, strategic brainstorming topics, and an appendix. Presenters are given tips to keep slides concise and focused on the most important information, metrics, challenges, and strategic questions.
This document summarizes a dispute over executive compensation at a small engineering services firm with annual revenues under $10 million. The majority owner set their own compensation which was questioned in a 2006 DCAA audit but not resolved until 2011. Key issues included what survey data and job descriptions were appropriate to evaluate compensation reasonableness, what percentile of the survey data should be used, and whether bonuses paid after the fiscal year should be allowed. Lessons learned included the need for a written compensation plan, robust justification of compensation levels, and understanding that audits can take years to resolve.
Contoh Penelitian Tentang Pengaruh Profitabilitas Terhadap Nilai PerusahaanTrisnadi Wijaya
1) The study examines how profitability influences firm value, with capital structure (leverage) as a mediator, and industry type and firm size as moderators.
2) The authors hypothesize that profitability has a positive effect on firm value but a negative effect on leverage. Leverage, in turn, is expected to negatively impact firm value.
3) Industry type and firm size are expected to moderate the relationships between profitability, leverage, and firm value. The study uses data from Taiwanese listed companies to test these hypotheses.
Many people consider executive compensation to be excessive, but is it really? The answer may lay in the eye of the beholder. A thought provoking discussion on the topic.
Presentation slides on the Impact of Dividend policy on firm Performance Neloy Kumar Roy
This document is a presentation on the topic of the impact of dividend policy on firm performance. It was submitted by a student to their professor and covers the following key points:
1. An overview of NCC Bank, including its history and current operations.
2. The objectives of the study, which are to merge practical knowledge with theory and understand the impact of dividend policy on firm performance.
3. Descriptions of the main activities carried out by NCC Bank's general banking, loans and advances, and foreign exchange departments.
4. Discussions of NCC Bank's dividend policy and theoretical frameworks, prior studies on the relationship between dividend policy and financial performance, and the impact of NCC's
The document discusses the controversy around CEO compensation. It notes that while CEOs make strategic decisions that impact company performance, very high compensation can create issues like lack of team performance and loyalty when there is a large gap compared to lower level employees. It suggests that CEO pay should be tied to company performance and layoffs, and that independent committees should set compensation to address these issues. Overall performance depends on both CEO leadership and external factors, so stock price alone can't determine a CEO's contribution. Uniform compensation across industries is impractical given varying company sizes and CEO roles.
The document summarizes research on the impact of "say on pay" votes, which allow shareholders to vote on executive compensation. Studies have found that say on pay has a limited impact. It may reduce egregious pay practices but does little to lower overall pay levels. Say on pay improves dialogue between boards and shareholders but has not been shown to consistently influence pay amounts. While it increases accountability, concerns remain that it could expose companies to activists or make it harder to attract executive talent.
This document discusses executive compensation and lessons learned from past practices. It provides background on compensation of chief executives, particularly in the United States. Key issues discussed include the many parties involved in executive compensation decisions, long-term rewards not tied to performance, and public outrage over large severance packages. The Dodd-Frank Act aimed to increase shareholder input and tie compensation more closely to performance. While reforms addressed some issues, questions still remain around justifying pay gaps and potential unintended consequences of performance-based compensation.
A Study Of Dividend Policy And Its Effect On Market Value Of Shares Of Select...iosrjce
Dividend policy is a strategy used by a company to determine the amount and timing of dividend
payments. The dividend policy framed by an organization is one of the crucial issues in corporate finance since
it may have an impact on the firm’s value and shareholder wealth. The research study is an attempt to analyze
the effect of dividend policy on shareholder wealth of thirty selected Indian banks listed and traded in Bombay
Stock Exchange (BSE).For the purpose of study the financial data from the period 2003-04 to 2012-13 of
selected Indian banks (15 Public and 15 Private) would be used. The data would be analyzed using statistical
tools like multiple regression technique, t test, the coefficient of determination (R2) and F-Value. The results of
the data analysis might reveal that that there is a significant effect of dividend policy on the share price of
selected Indian Banks. The study is limited to a time period of 10 years and only selected Indian Banks. The
result might change if the time period and number of banks are extended.
The document provides information about the Afterschoool Centre for Social Entrepreneurship and its PGPSE program. The PGPSE program is a comprehensive program in social entrepreneurship and spiritual entrepreneurship that aims to develop social entrepreneurs. The program is open to all and available for free online or in-person. It uses case studies and practical lessons from top business schools. The document lists some workshops and flexible specializations offered by the program.
The document discusses key concepts in corporate finance including the goals of maximizing shareholder wealth over time, separation of ownership and management leading to agency issues, and viewing corporate securities as contingent claims on firm value with debt holders having a fixed claim and shareholders receiving residual value. It also examines ways to resolve agency problems through structuring incentives to align manager and shareholder interests such as compensation linked to performance.
The document discusses key concepts in corporate finance including the goals of maximizing shareholder wealth over time, separation of ownership and management leading to agency problems, and using debt and equity as contingent claims on firm value. It also summarizes how boards can help align manager and shareholder interests through incentive structures like stock ownership, pay linked to performance, and the threat of dismissal.
CFA Institute Research Challenge Sterling Financial Corporation (STSA) resear...RyanMHolcomb
Sterling Financial Corporation is a regional bank headquartered in Washington state that was heavily impacted by the financial crisis but has since recovered through recapitalization efforts. The report recommends holding Sterling stock with a price target of $19.46, a 5% increase, citing improving financial trends, a diversified loan portfolio, and growth strategies around loan originations and acquisitions. However, risks remain from economic uncertainty and interest rate pressures on margins.
This document summarizes current trends in association compensation based on survey data from the National Association of Manufacturers Council of Manufacturing Associations (NAM CMA). Key findings include an increase in median operating budgets and CEO compensation levels among survey participants from 2010-2013. The majority of associations provide incentive compensation and defined contribution retirement plans to their CEOs. The document discusses approaches to defining compensation peer groups and using market data to set executive pay levels. It also notes trends toward greater governance and documentation of executive compensation decisions.
How do you determine the right blend of salaries and incentives in your pay strategy? Some believe that paying higher salaries attracts the best people, and therefore improves company performance. Others believe employee earnings should be tied to results, so they emphasize variable pay. So, is one right and the other wrong?
Obviously, there is no universal “right” way to pay employees. Instead, you must find what works best for your organization. So, how do you do that?
That is the question this webinar plans to answer. We will discuss 3 principles for determining the right rewards balance for your company and how they can be used to resolve the higher salary versus bigger incentives dilemma.
Keep calm and carry on - presentation for High Peak CVStonyosailing
The document discusses the challenges facing voluntary organizations in the UK given the economic recession and government funding cuts. It provides statistics on the size of the voluntary sector and effects of the recession, including increased demand for services and decreased donations. The document then discusses the government's "Big Society" initiative and different strategies organizations can take to address challenges, such as downsizing, merging, diversifying activities, or developing new service models. It also shares lessons learned from a case study of two organizations that collaborated to reduce costs while maintaining services.
We find that IPO firms with generously compensated CEOs and large pay disparities between the CEO and other top executives have lower failure rates and longer time to survive in subsequent periods following the offering. Economically, firms with CEO pay (pay gaps) in the 75th percentile have a failure risk that is, on average, 11.56% (13.20%) lower than the failure risk of firms with CEO pay (pay gaps) in the 25th percentile. The relationship between CEO pay and IPO survival is strengthened among firms with lower agency conflicts, whereas the link between pay gap and IPO survival is pronounced among firms with stronger internal promotion incentives. The results are robust to alternative specifications and additional sensitivity tests.
The document summarizes the Spring 2015 Advisory Board meeting of the Architectural Technology Community College of Denver. It discusses topics such as the program vision, curriculum goals, student work, faculty, and strategies to improve enrollment and relevance. Key goals are strengthening sustainable design, BIM, and construction technology education to meet industry needs.
This is the groups winning marketing strategy for our “Natura” product as part of the AAK marketing competition and the module “Marketing”. The presentation received 1st grade.
This document discusses the theory of behaviorism in education. It describes the key proponents of behaviorism including Ivan Pavlov, Edward Thorndike, John Watson, and B.F. Skinner. Pavlov studied classical conditioning through his experiments with dogs. Thorndike proposed the law of effect and connectionism, believing learning occurs through stimulus-response associations that are strengthened by rewards. Watson conducted experiments on conditioning emotional responses. Skinner expanded on operant conditioning, believing that learning is based on changes in behavior from responses to environmental stimuli and reinforcement. The document provides examples of reinforcement and non-reinforcement in behaviorism theory.
The document outlines the agenda and presentation materials for an upcoming board meeting. It includes sections on board business, key business metrics, financial updates, a company overview slide, business progress updates from the CEO and functional teams, strategic brainstorming topics, and an appendix. Presenters are given tips to keep slides concise and focused on the most important information, metrics, challenges, and strategic questions.
Board Meeting Data: What Every Marketing Executive Should KnowLotus Growth
This document provides tips for marketing executives to better understand their marketing funnel and attribution data for board meetings. It recommends implementing full-funnel attribution by using UTMs to track sources throughout the customer journey. Diagnosing missing attribution data and creating custom programs in marketing automation mapped to source channels can provide clearer reporting in Salesforce. Showing ROI for marketing channels and preparing slides analyzing past lead sources and calculating success helps get buy-in for future programs.
Gavi’s CEO Dr Seth Berkley presents an overview of the Alliance’s achievements to the Board on 2 December 2015. Topics include a summary of results and challenges in the 2011-2015 strategy period, Gavi’s increasing focus on coverage, equity and sustainability going forward, global health security and the broader immunisation landscape.
This document outlines the procedures and requirements for board meetings held through video conferencing. It specifies that the chairperson and company secretary must record proceedings, prepare minutes, and store recordings securely. Directors wishing to participate virtually must provide prior notice and state their name, location, and that no unauthorized persons are present at their location. The meeting must maintain quorum throughout and follow procedures for voting, decision summaries, and attendance recording. Certain matters like annual financial statements cannot be dealt with virtually. Requirements are also outlined for audit committees, vigil mechanisms, director interest disclosures, related party loans, and maintaining a loan/investment register.
The document provides a step-by-step guide for taking minutes at a board meeting. It outlines four key steps: 1) Preparing for the meeting by reviewing past minutes and getting the agenda. 2) Taking notes during the meeting, including important details like motions, votes, and discussions. 3) Writing the official minutes after the meeting. 4) Signing and filing the minutes according to the organization's procedures. The document stresses that minutes should be an objective record that accurately reflects board discussions and actions for legal purposes.
Board Meetings and Directors - Companies Act 2013Novojuris
Board's report
The document discusses key changes to the Companies Act 2013 regarding appointment and qualifications of directors, meetings of the board and its powers. Some key changes include:
To recommend dividend
- Increasing the maximum number of directorships an individual can hold from 15 to 20.
To approve amalgamation, merger, demerger, acquisition and takeover
- Requiring certain large public companies to have at least one woman director and one-third of total directors as independent directors.
To approve sale, purchase or transfer of undertaking
- Specifying additional duties of directors including acting in good faith and in the interests of employees, community and environment.
- Requiring
The board meeting of the [NAME OF ASSOCIATION] was called to order at 7:00 p.m. on [DATE]. Minutes from the previous meeting were approved, and treasurer, management, and attorney reports were presented. The board voted against resurfacing the pool for $26,000 but voted to amend association rules to restrict leasing and accept a landscaping contract. The meeting adjourned at 8:30 p.m.
This document summarizes research on the relationship between executive compensation and firm performance. The key points are:
1. Executive compensation has increased dramatically over the last 3 decades, far outpacing worker pay growth. However, research studies have found little to no correlation between high executive pay and stronger firm performance.
2. While companies argue that incentive-based pay motivates executives, some studies show executive pay is often not closely tied to performance metrics and stock price movements.
3. Alternative views of "performance" beyond short-term profits, such as investment, innovation, and workforce development, are rarely considered in executive compensation.
4. To strengthen the link between pay and performance, companies increasingly use long-
This document discusses executive compensation, including bonuses, stock options, and stock grants. It outlines how these compensation methods are intended to align manager and shareholder goals by tying executive wealth to shareholder wealth. However, the evidence is mixed on whether incentive-based compensation actually achieves this goal, as firm performance does not seem strongly correlated with executive pay. The document also provides examples of potential managerial conflicts of interest and self-serving behaviors that compensation aims to address.
This document summarizes an analysis of executive compensation through various ethical frameworks and a case study on AIG. It discusses how executive pay has increased over time compared to average workers. While compensation is meant to incentivize performance, studies show pay is often not linked to returns. The document analyzes stakeholder perspectives and applies utilitarianism, justice theories, and ethics of care. It examines the AIG bonus scandal where executives received large payouts despite losses, and the public outrage this caused. Recommendations include linking pay to long-term performance and increasing shareholder say on compensation.
Executive Compensation and IncentivesMartin J. ConyonEx.docxcravennichole326
Executive Compensation and Incentives
Martin J. Conyon*
Executive Overview
The objective of a properly designed executive compensation package is to attract, retain, and motivate
CEOs and senior management. The standard economic approach for understanding executive pay is the
principal-agent model. This paper documents the changes in executive pay and incentives in U.S. firms
between 1993 and 2003. We consider reasons for these transformations, including agency theory, changes
in the managerial labor markets, shifts in firm strategy, and theories concerning managerial power. We show that
boards and compensation committees have become more independent over time. In addition, we demonstrate
that compensation committees containing affiliated directors do not set greater pay or fewer incentives.
Introduction
E
xecutive compensation is a complex and con-
troversial subject. For many years, academics,
policymakers, and the media have drawn atten-
tion to the high levels of pay awarded to U.S.
chief executive officers (CEOs), questioning
whether they are consistent with shareholder in-
terests.1 Some academics have further argued that
flaws in CEO pay arrangements and deviations
from shareholders’ interests are widespread and
considerable.2 For example, Lucian Bebchuk and
Jesse Fried provide a lucid account of the mana-
gerial power view and accompanying evidence.3
Marianne Bertrand and Sendhil Mullainathan too
provide an analysis of the ‘skimming view’ of CEO
pay.4 In contrast, John Core et al. present an
economic contracting approach to executive pay
and incentives, assessing whether CEOs receive
inefficient pay without performance.5 In this pa-
per, we show what has happened to CEO pay in
the United States. We do not claim to distinguish
between the contracting and managerial power
views of executive pay. Instead, we document the
pattern of executive pay and incentives in the
United States, investigating whether this pattern
is consistent with economic theory.
The Context: Who Sets Executive Pay?
B
efore examining the empirical evidence pre-
sented in this paper, it is important to consider
the pay-setting process and who sets executive
pay. The standard economic theory of executive
compensation is the principal-agent model.6 The
theory maintains that firms seek to design the most
efficient compensation packages possible in order to
attract, retain, and motivate CEOs, executives, and
managers.7 In the agency model, shareholders set
pay. In practice, however, the compensation com-
mittee of the board determines pay on behalf of
shareholders. A principal (shareholder) designs a
contract and makes an offer to an agent (CEO/
manager). Executive compensation ameliorates a
moral hazard problem (i.e., manager opportunism)
arising from low firm ownership. By using stock
options, restricted stock, and long-term contracts,
shareholders motivate the CEO to maximize firm
value. In other words, shareholders try to design
optimal compensation packages .
Executive Compensation at Financial InstitutionsDavid Stone
This document discusses executive compensation at financial institutions. It provides context on the structure of executive compensation packages generally and how they have changed over time. While compensation structures are similar across industries, the document argues executive compensation at financial institutions should better account for risks to stakeholders beyond shareholders, as excessive risk-taking contributed to the global financial crisis. The crisis has spotlighted compensation at financial firms and led to reductions, especially for CEOs, though broader reform is still needed.
The fact is that most of the executives who did not earn a salary or cash bonus last year were nevertheless increasing
their personal wealth in other ways, sometimes in addition to having significant stockholdings.
The document discusses executive compensation policies and provides an overview of different compensation elements such as salary, bonuses, and equity-based compensation. It presents empirical evidence on the relationship between various compensation structures and company and executive performance. The document also examines compensation cases at BMW and Shell, discussing whether the structures adequately incentivize executives or could be improved. It concludes that the optimal compensation package balances different elements to align executive and shareholder interests while minimizing agency problems.
Discusses Major Compensation Issues regarding Executive Compensation. Provides Justification for Unreasonable Executive Compensation and Outlines measures for Executive Accountability
The Realities of Pay Performance for Alignment in 2014Pearl Meyer
The webinar discussed pay-for-performance alignment in board leadership. It highlighted that while pay-for-performance is ubiquitous, defining performance and ensuring the right amount of pay is given for the right level of performance remains challenging. Different stakeholders view performance differently based on measures, standards and timeframes used. The webinar also showed that long-term incentive payouts are greatest for top performing companies based on a UK CEO value index, and that just 10% of FTSE 350 companies achieved high value-added ratios. Compensation committees were advised to focus on disclosing why certain performance measures are used and ensuring incentive programs support business strategy.
This document summarizes recent literature on CEO compensation. It finds that CEO pay has risen rapidly over the past 30 years, with median pay among S&P 500 CEOs increasing from $2.3 million in 1992 to a peak of $7.2 million in 2001. This growth is driven by both rising pay levels across firms of all sizes, as well as a shift toward stock options and equity-based compensation. While some argue high pay is optimal, others argue it reflects rent extraction by powerful CEOs. The literature finds evidence for both views but neither fully explains patterns in the data. Future research on exogenous changes may help distinguish between the two perspectives.
Executive compensation has received attention due to high visibility, perceived unfairness, and importance. A good corporate governance rating signals that the board prioritizes shareholders over the CEO. Executive pay packages can motivate strategic decisions that benefit shareholders or reinforce the wrong choices. Recent environmental changes like shareholder activism, Sarbanes-Oxley, and SEC disclosures are affecting CEO risk and compensation. Managing risk involves stock options, pay-for-performance, and golden parachute provisions. The risk environment should influence executive contract design.
This document discusses the evolution of board compensation structures from past to present to future. Historically, boards were primarily compensated with salaries, but this structure failed to properly incentivize directors to increase shareholder value. Currently, most boards receive an equity-based compensation of stocks or stock options in addition to salary. However, this can make boards risk-averse. In the future, some propose paying directors bonuses tied to stock performance relative to industry peers as a "pay for performance" structure. However, this may incentivize short-term thinking. The author proposes a hybrid structure with performance bonuses for all directors to balance short and long-term incentives.
There is a large disconnect between public perception and corporate directors' views on CEO pay. While most of the public believes CEO pay is too high, directors believe it is appropriate. There is also disagreement on how to measure corporate performance and determine CEO contributions. Directors believe CEOs are responsible for 40% of company performance, but studies show it may be much lower. No standard model exists for determining the appropriate value sharing between CEO pay and shareholder returns. This lack of agreement means controversy over CEO compensation will likely continue.
A company offer a competitive compensation arrangement in order to attract, retain, and motivate a qualified CEO to manage the organization.
This Quick Guide examines the elements of executive compensation and the process by which the compensation committee establishes pay packages.
It examines the questions:
• What is the purpose of a compensation program?
• How do boards structure pay?
• What is the difference between expected, earned, and realized pay?
• How much do CEOs make?
• Are CEOs paid the “right” amount?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
This document discusses executive compensation. It begins by defining executive compensation and outlining two main approaches to determining compensation - the optimal contracting approach and managerial power/rent extraction approach. It then describes some common executive compensation structures and limitations of the optimal contracting approach. Key points include that executive compensation aims to align executive and shareholder interests but managers can also influence their own pay.
Running head CASE STUDY 31CASE STUDY 31AbstractThe hu.docxhealdkathaleen
Running head: CASE STUDY 3 1
CASE STUDY 3 1
Abstract
The human resource manager, Don, is tasked with analyzing the compensation package of the CEO and ensuring fair pay to all employees. The factors that outline this pay structure are all vital importance when determining the compensation structure. The staff seen on the front lines are important to the organization but retaining the CEO is a great determining factor in the success of an organization. The CEO has a higher chance of remailing with the company if they are offered a competitive compensation package.
There are numerous segments that make up the director of human resources responsibilities. For this company, these responsibilities lie on Don, who must create the executive pay structure and condense each component. Don needs to gather further information to correctly determine the effective pay rate for the company’s CEO. The best solution for Don is to use the three best hypotheses to depict the procedures identified with setting official remuneration: office hypothesis, competition hypothesis, and processes used in creating executive compensation. These three theories are described by author Marticchio (2017) as the agency theory, tournament theory, and social comparison theory.
If Don were to utilize the agency theory, he would consider pressuring the COE’s proprietorship within the company. If Don chose to make the pay package through the social comparison theory gathering details on the market rates for similar industries is a must. With this theory, Don can also determine any parts of the CEO’s salary that is performance based and use those numbers to show how the CEO is adding success to the company. Though the company may be in a financial bind, this information can give detail into how the CEO is leading the company to a better future.
As the head of HR, Don must steer between implementing the best practices for the CEO's compensation plans or tweaking the compensation to line up with the objectives to of the investors (Hou, Priem, and Goranova). It is normal that Don will come across bothersome instances regarding the CEO’s pay structure and whether it is the more fair or logical decision. This HR executive has the best chance to create an excellent compensation package that all parties would agree on by detailing the pay contrasts directly to the Oakwood workers and featuring the connection that the pay structure has based on the CEO’s performance. By explaining the abilities, skills, and knowledge the COE must bring into his role, it will be better understood that his higher pay is justified. This pay structure works so well because the CEO only benefits when the company grows and gains in profits (Brisker, Colak, and Peterson, 2014). Offering the employees some examples of commitments and achievements the CEo has performed will provide background into how the CEO will further the company and create opportunities for everyone.
Don’s main goal is to ...
The document discusses compensation and benefits strategies for Landslide Limousine, a small business in Austin, Texas. It summarizes the results of a market evaluation conducted by Atwood and Allen Consulting, which found the average salary for limousine drivers to be higher than what LL can afford to pay. The consulting firm recommends positioning LL to pay drivers $2/hour less than average while offering additional benefits and incentives. It also suggests paying management 5% more to maintain pay balance and focusing compensation on incentives to help control fixed labor costs.
This document discusses several topics related to business ethics including human rights, philosophical questions about justifying and defining human rights, the Caux Principles of Business which outline ethical ideals of kyosei and human dignity, and views on justice in wages including the agreement, desert, and utility views. It also examines the debate around whether CEOs get paid too much based on a comparison to average worker pay increases.
The document discusses CEO compensation and argues that successful CEOs deserve high pay because they have significant influence over corporate performance through long-term strategic decision making that creates shareholder wealth. It provides examples of how Jack Welch transformed GE and argues that finding talented CEOs is as difficult as finding star athletes, so high compensation is needed to attract and retain exceptional leaders. While some question high CEO pay, the document claims that like star athletes, CEOs' rare talents produce real value and it is right to reward them accordingly.
The document discusses issues with the timing disconnect between executive pay disclosure requirements and actual pay decisions. It recommends adding supplemental tables to the Summary Compensation Table to show target pay for the current year and actual pay for the previous year. This would better align the disclosure of executive pay with the relevant performance periods, allowing for more accurate assessment of pay-for-performance alignment. It would also allow shareholders to provide feedback on pay decisions in a more timely manner.
GradTouch is a company launched in 2010 that connects graduates with internship and job opportunities at SMEs and large companies. It aims to streamline the recruitment process for both graduates and employers. The document recommends that job seekers register with GradTouch for support services like CV and application review. It also provides contact information for the campus ambassador to receive weekly job listings and pass along CVs to GradTouch for recruitment.
This document discusses CEO compensation levels and arguments around their fairness. It provides historical data showing CEO pay increasing 340% from 1991-2001, far outpacing average worker pay which rose 36%. Views of justice in wages are examined, including agreement between parties, deservedness based on role, and maximizing utility. Examples are given of both controversial high payouts and profit sharing compensation models. Arguments for and against high CEO pay are outlined. Recommendations are made to tie compensation more closely to performance and restrict stock sales.
1. CEO Packages
Is executive
compensation too
Emma Kitchen, Laura Jibson
George Rispin, Xue Junzhao
high?
2. Introduction: Aims
Illustrate historical and current levels of CEO
compensation
Assess views of justice in wages
Examine arguments for and against high levels of
compensation
Recommendations
2
3. During the time period of 1991-2001,
CEO compensation increased by 340%
The average workers
compensation only
increased by 36%
4. Background
CEO’S pay has increased significantly following the
enactment of anti takeover laws passed in 1980’s.
This resulted in CEO’S receiving a large proportion of
their compensation in the form of stocks and shares
There is an increased sensitivity to performance and the
amount they received was dictated by the market and
industry factors.
This is especially relevant now as the cheap stocks which
CEO’S received during the stock market decline are
starting to rise, resulting in huge pay-outs
4
6. Justice in Wages
According to Moriarty (2009) there are three common views
frequently applied to justice in wages:
– The Agreement View
“Appropriate prices for goods are obtained through arms length negotiations
between informed buyers and informed sellers”
– The Desert View
“People deserve certain wages for performing certain jobs, whatever they might
agree to accept for performing them”
– The Utility View
“To maximise a firms wealth by attracting, retaining and motivating talented
workers”
6
7. The Agreement View
CEO compensation is decided by the
‘Compensation Committee’
This is made up of directors who serve on the
company's board
Directors are elected by shareholders
Members should be informed and independent
7
8. The Desert View
Compensation should be based on contribution
and performance
Which other factors should be taken into
consideration?
How can CEO contribution be measured?
8
9. Example: Fred Goodwin
Fred Goodwin is the former chief executive for RBS, of which
70% is now owned by the taxpayer.
The guardian newspaper referred to him as “The worlds
worst banker” due to his irresponsible dealings in the sub
prime mortgage market.
He received an very large payoff after he agreed to resign
His pension is £16.9 million, this works out at an average of
£693,000 per year
10. Cont.
His payoff is in line with fellow bankers who receive an
average of £650,000 per year
The high pension caused anger with taxpayers and MP’S
Bank of England governor criticised Goodwin's large
pension, saying that it encourages reckless gambling and
rewarding bad behaviour
11. Example: Black and Decker
New USA legislation passed in 2010 resulted in public
companies having to let shareholders vote at least once
every three years regarding CEO compensation
In 2011 only 12 companies voted against CEO pay, this is
due to industry pressure to “pay the going rate”
The board voted against Black and Decker’s CEO John
Lundgren receiving $32.6 million
But the board eventually gave in to pressure and paid
Lundgren, making him the fifth highest paid CEO in 2010
12. Cont.
Theory of Managerial Power supports this. As Lundgren
was very powerful he could demand the package
Due to public anger, the board tried to disguise the
amount he received by issuing him 325,000 shares valued
at $18.7 million
With the average employee earning $40,000, this
resulted in a pay gap of 325-1
13. Example: John Lewis Group
69,000 employees as ‘Partners’, essentially
owning a share of the profits
Bonus structure is the same for every worker at
every level, a common % of income based on the
group’s annual profit
2009 Operating Profit £316.8m, Partners’ Bonus = 13% of
salary, total £125.4m
2010 OP £389.7m, Bonus = 15% of salary, total £151.3m
2011 OP £431.0m, Bonus = 18% of salary, total £194.5m
13
15. Arguments For
Economic Analysis
Correlation between CEO pay and company performance
Will provide an incentive for innovation and risk-taking
Attract, retain and motivate talented leaders
16. Arguments Against
The relation between executive and average employee’s
compensation
Widening gap between executive and average
employee’s compensation
Gap between domestic and foreign executive
compensation
Compensation equity vs. work equity
Distributive equity
17. Recommendations
Base CEO compensation on improving real
measures, such as; earnings per share, return on
invested capital and market share
Ban executives from selling shares for a fixed
number of years
Specify the dates on which equity awards will be
given
17
18. Cont.
Payoff shares based on an average stock price,
rather than a single stock price
Introduce a measure whereby executives must
release a statement detailing how and when they
will sell any shares
Salary caps
18
19. References
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Oxford Handbook of Business Ethics (pp. 161-201). New York: Oxford University Press.
Cheng, S., & Indjejikian, R. J. (2009). The Market for Corporate Control and CEO Compensation: Complements or
Substitutes? Contemporary Accounting Research, 26(3), 701-728.
Crane, A., & Matten, D. (2004). Business Ethics. Oxford: Oxford University Press.
DeGeorge, R. T. (2010). Business Ethics. New Jersey: Pearson Education.
DesJardins, J. (2009). An Introduction to Business Ethics. New York: McGraw-Hill.
Henderson, B. C., Masli, A., Richardson, V. J., & Sanchez, J. M. (2010). Layoffs and CEO Compensation: Does CEO
Power Influence the Relationship? Journal of Accounting, Auditing and Finance, 25(4), 709-748.
McCall, J. J. (2005). Assessing Executive Compensation. In J. R. DesJardins, & J. J. McCall, Contemporary Issues in
Business Ethics (pp. 102-112). Belmont: Wadsworth, Cengage Learning.
Meredith, D. R. (1992, September). Exploding Myths of CEO Pay. (79), pp. 32-44.
Moriarty, J. (2009). Do CEO's get paid too much? In T. L. Beauchamp, N. E. Bowie, & D. G. Arnold, Ethical Theory and
Business (pp. 692-702). New Jersey: Pearson Education.
Nichols, D., & Subramanian, C. (2001, February). Executive Compensation: Excessive or Equitable? Journal of
Business Ethics, 29(4), 339-351.
Perel, M. (2003). An Ethical Perspective on CEO Compensation. Journal of Business Ethics, 48(4), 381-391.
Rawls, J. (2998). Distributive Justice. In T. Donaldson, & P. H. Werhane, Ethical Issues in Business: A Philosophical
Approach (pp. 222-232). New Jersey: Pearson Education.