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
Executive compensation at U.S. companies has become dramatically disproportionate relative to the average workers at those companies over the past 25 years. Now, the current global financial crisis is putting a harsh spotlight on executive compensation at financial institutions in particular. This report looks at the basic nature of executive compensation packages and the issues or concerns that have been raised about them. That information provides a context for looking specifically at financial institutions: what makes their executive compensation programs different and how the current financial crisis is going to affect those programs.
Executive Compensation: Exploring Models and Considerations in Corporate Remu...assignmentcafe1
Welcome to our comprehensive SlideShare presentation on executive compensation, where we delve into the intricate world of corporate remuneration models and considerations. Join us as we explore the various approaches, challenges, and ethical considerations surrounding executive compensation in today's corporate landscape.
In this enlightening presentation, we aim to provide a nuanced understanding of the complexities involved in determining executive compensation packages. We examine different models and frameworks, including performance-based pay, equity-based incentives, and bonus structures, and assess their effectiveness in aligning executive incentives with organizational goals.
Through a careful analysis of industry practices, regulatory frameworks, and shareholder perspectives, we explore the considerations that shape executive compensation decisions. We delve into the challenges of balancing competitive market forces, ensuring fairness and transparency, and addressing concerns related to income inequality and excessive executive pay.
Furthermore, we examine the impact of executive compensation on corporate governance, organizational culture, and long-term value creation. We discuss the influence of compensation structures on risk-taking behavior, strategic decision-making, and the attraction and retention of top talent within the company.
Our presentation goes beyond theoretical discussions by incorporating real-world examples and case studies. By exploring notable instances of successful and controversial executive compensation practices, we aim to provide practical insights and lessons for organizations navigating this complex landscape.
Through this exploration, we encourage reflection and dialogue on the ethical dimensions of executive compensation. We consider the perspectives of various stakeholders, including shareholders, employees, and society at large, and discuss the importance of designing compensation packages that align with broader social and organizational values.
Join us as we delve into the multifaceted world of executive compensation, analyzing different models, considerations, and ethical implications. Together, let us gain a deeper understanding of the intricacies surrounding corporate remuneration and explore ways to promote fairness, accountability, and long-term sustainable growth.
Discusses Major Compensation Issues regarding Executive Compensation. Provides Justification for Unreasonable Executive Compensation and Outlines measures for Executive Accountability
Executive Compensation at Financial InstitutionsDavid Stone
Executive compensation at U.S. companies has become dramatically disproportionate relative to the average workers at those companies over the past 25 years. Now, the current global financial crisis is putting a harsh spotlight on executive compensation at financial institutions in particular. This report looks at the basic nature of executive compensation packages and the issues or concerns that have been raised about them. That information provides a context for looking specifically at financial institutions: what makes their executive compensation programs different and how the current financial crisis is going to affect those programs.
Executive Compensation: Exploring Models and Considerations in Corporate Remu...assignmentcafe1
Welcome to our comprehensive SlideShare presentation on executive compensation, where we delve into the intricate world of corporate remuneration models and considerations. Join us as we explore the various approaches, challenges, and ethical considerations surrounding executive compensation in today's corporate landscape.
In this enlightening presentation, we aim to provide a nuanced understanding of the complexities involved in determining executive compensation packages. We examine different models and frameworks, including performance-based pay, equity-based incentives, and bonus structures, and assess their effectiveness in aligning executive incentives with organizational goals.
Through a careful analysis of industry practices, regulatory frameworks, and shareholder perspectives, we explore the considerations that shape executive compensation decisions. We delve into the challenges of balancing competitive market forces, ensuring fairness and transparency, and addressing concerns related to income inequality and excessive executive pay.
Furthermore, we examine the impact of executive compensation on corporate governance, organizational culture, and long-term value creation. We discuss the influence of compensation structures on risk-taking behavior, strategic decision-making, and the attraction and retention of top talent within the company.
Our presentation goes beyond theoretical discussions by incorporating real-world examples and case studies. By exploring notable instances of successful and controversial executive compensation practices, we aim to provide practical insights and lessons for organizations navigating this complex landscape.
Through this exploration, we encourage reflection and dialogue on the ethical dimensions of executive compensation. We consider the perspectives of various stakeholders, including shareholders, employees, and society at large, and discuss the importance of designing compensation packages that align with broader social and organizational values.
Join us as we delve into the multifaceted world of executive compensation, analyzing different models, considerations, and ethical implications. Together, let us gain a deeper understanding of the intricacies surrounding corporate remuneration and explore ways to promote fairness, accountability, and long-term sustainable growth.
Discusses Major Compensation Issues regarding Executive Compensation. Provides Justification for Unreasonable Executive Compensation and Outlines measures for Executive Accountability
Some executives who accumulate a substantial ownership position in the company hedge or pledge their shares to limit their financial risk. Should the board of directors allow this to occur?
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 ...
This Research Spotlight provides a summary of the academic literature on CEO pay levels in the United States. It reviews the evidence of:
• Long-term trends in the CEO compensation
• The relation between CEO compensation and governance quality
• The relation between peer group composition and CEO pay
• The relation between compensation consultant selection and CEO pay
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Compensation”.
111021, 137 PM Commentary - HRMN 395 7381 The Total RewardsBenitoSumpter862
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 1/19
Module 2: Core Elements of Monetary Rewards
Topics
Topic 1: What are Monetary Rewards?
Topic 2: Key Elements of Analysis and Documentation
Topic 3: Assessing and Rewarding Performance
Topic 4: Regulatory Aspects of Monetary Rewards
Topic 5: Philosophy of Market Positioning and Link to Total Rewards
Topic 6: Conclusions
Topic 1: What are Monetary Rewards?
The total rewards approach to compensation management is strategically planning a
targeted reward package to successfully attract, retain, and motivate segmented
populations of employees who possess the requisite knowledge, skills, and abilities (KSAs)
needed to achieve the organization's objectives. Table 1.2 in module 1 illustrates the
interdependent relationship of the components of the total rewards approach to
compensation. The table shares the three major components of total rewards, including
the monetary, non-monetary, and other elements of the work experience, which combine
strategically for the total rewards philosophy for the organization. Column 1 in Table 2.1
below shares many of the monetary rewards organizations offer today and will be
described in this module.
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#I
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#II
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#III
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#IV
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#V
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#VI
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 2/19
Table 2.1 Three Elements of the Total Rewards Model
Monetary Rewards
Non-monetary
Rewards
Work Experience
Base Pay
Income Protection
Benefits
Values of the Organization
Variable Pay Medical Insurance
Community (Individual
and Organizational)
Merit and Cost of
Living Increases
Vision and Dental Recognition
Retirement Savings Disability Training and Development
Performance
Feedback
Life Insurance Promotions
Deferred
Compensation
Paid Time Off Sense of Accomplishment
Day Care
Employee
Assistance
Program
Health Related
Programs
Tuition Assistance
Monetary Rewards
Monetary rewards are, unmistakably, a vital element of total rewards. Christofferson &
King (2006, p. 27) describe mometary rewards as "the pay provided by an employer to an
employee for services rendered ...
111021, 137 PM Commentary - HRMN 395 7381 The Total RewardsSantosConleyha
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 1/19
Module 2: Core Elements of Monetary Rewards
Topics
Topic 1: What are Monetary Rewards?
Topic 2: Key Elements of Analysis and Documentation
Topic 3: Assessing and Rewarding Performance
Topic 4: Regulatory Aspects of Monetary Rewards
Topic 5: Philosophy of Market Positioning and Link to Total Rewards
Topic 6: Conclusions
Topic 1: What are Monetary Rewards?
The total rewards approach to compensation management is strategically planning a
targeted reward package to successfully attract, retain, and motivate segmented
populations of employees who possess the requisite knowledge, skills, and abilities (KSAs)
needed to achieve the organization's objectives. Table 1.2 in module 1 illustrates the
interdependent relationship of the components of the total rewards approach to
compensation. The table shares the three major components of total rewards, including
the monetary, non-monetary, and other elements of the work experience, which combine
strategically for the total rewards philosophy for the organization. Column 1 in Table 2.1
below shares many of the monetary rewards organizations offer today and will be
described in this module.
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#I
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#II
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#III
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#IV
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#V
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#VI
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 2/19
Table 2.1 Three Elements of the Total Rewards Model
Monetary Rewards
Non-monetary
Rewards
Work Experience
Base Pay
Income Protection
Benefits
Values of the Organization
Variable Pay Medical Insurance
Community (Individual
and Organizational)
Merit and Cost of
Living Increases
Vision and Dental Recognition
Retirement Savings Disability Training and Development
Performance
Feedback
Life Insurance Promotions
Deferred
Compensation
Paid Time Off Sense of Accomplishment
Day Care
Employee
Assistance
Program
Health Related
Programs
Tuition Assistance
Monetary Rewards
Monetary rewards are, unmistakably, a vital element of total rewards. Christofferson &
King (2006, p. 27) describe mometary rewards as "the pay provided by an employer to an
employee for services rendered ...
Employers conduct compensation self-audits for a variety of reasons, ranging from obligations as a federal contractor to a desire for a deeper understanding of their compensation practices. Compensation self-audits are also frequently found as part of an employer’s risk management plan; self-audits allow an employer to identify potential problem areas and assess the extent of exposure in the event of compensation litigation.
Week One Discussion 500 Word Min.This weeks discussion covers .docxhelzerpatrina
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question:“What are the core competencies or skills an HRD manager must have, and how are they acquired? “
Week One
Discussion
:
500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16
-
19 in the course text
.
(Pictures Below)
Question:
“What
are the core competencies or skills an HRD manager must have, and how are they acquired
?
“
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question: “What are the core competencies or skills an HRD manager must have, and how are they acquired? “
MHR 6901, Compensation Management 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
5. Explain workers’ compensation.
5.1 Convince others that executive compensation is too high or is just right.
5.2 Identify compensation rules that apply to the flexible workforce.
Course/Unit
Learning Outcomes
Learning Activity
5.1 Unit VI Essay
5.2 Unit VI Quiz
Reading Assignment
Chapter 11: Compensating Executives
Chapter 12: Compensating the Flexible Workforce: Contingent Employees and Flexible Work Schedules
Unit Lesson
So far in this course, we have talked about how compensation is used and the components of a
compensation system. Let us review these a bit before we move into compensating executives.
Typically, compensation is used to recruit and retain highly qualified employees. The organization’s business
strategy (lead, lag, or match strategy) determines how the organization recruits and retains employees. A
good compensation system also increases morale or at least maintains employee satisfaction. As mentioned
earlier in the course, compensation systems include wages and benefits. A good compensation system is one
that evaluates the employees’ needs and makes adjustments, where possible, to meet those needs.
Employees who have their needs satisfied are more likely to be productive and loyal to the organization,
which, in turn, reduces costs for the organization. This is great for the average worker, but what about the
organization’s executives? Executive compensation is a challenge for most organizations and is a highly
controversial subject, especially after the government bailouts in 2008 and 2009.
Executive compensation is different than that for most salary or hourly employees and can consist of a variety
of options. It is generally focused on generating profits and long-term growth and is considered contingent
compensation, which means that the pay is structured to reward or pay based on th ...
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.
Examine how nature is discussed throughout The Open Boat.” Loo.docxcravennichole326
Examine how nature is discussed throughout “The Open Boat.” Look at the literary critical piece by Anthony Channell Hilfer. Once you have established your own ideas, consider how Hilfer discusses nature in the short story and analyze the following questions: What does nature mean to the men aboard the boat? or Do their perceptions of nature shift throughout the story? Why or why not?
Do their perceptions of nature shift throughout the story? Why or why not?
Write down a loose response about what I think of the question and what I remember of the story.
ICE method.
I introduce the citation
C the citation itself
E explain its meaning to your argument.
The scenes shift with no discernable rhyme or reason. Crane invites every reader in. Critic Anthony Channell Hilfer disagrees with point, saying, “Crane’s image is an accusation of the putative picturesque spectators” (Hilfer 254). Hilfer’s challenge goes against what Crane is trying to do, by making nature a copilot through the reading.
3. Nature as Protagonist in “The Open Boat”
Anthony Channell Hilfer
Texas Studies in Literature and Language, Volume 54, Number 2, Summer
2012, pp. 248-257 (Article)
Published by University of Texas Press
DOI:
For additional information about this article
[ Access provided at 9 Apr 2020 17:36 GMT from Marymount University & (Viva) ]
https://doi.org/10.1353/tsl.2012.0012
https://muse.jhu.edu/article/476402
https://doi.org/10.1353/tsl.2012.0012
https://muse.jhu.edu/article/476402
Anthony Channell Hilfer248
3. Nature as Protagonist in “The Open Boat”
The bottom of the sea is cruel.
—Hart Crane, “Voyages”
As many critics have argued, questions of perspective and epistemology are
central to Stephen Crane’s “The Open Boat” (Kent; Hutchinson). The story’s
first sentence famously clues us to this: “None of them knew the color of
the sky” (68). But behind the uncertainties of perspective is a determinable
ontology, a presence, or rather, I shall argue, a sort of presence, the existence
of which implies a rectified aesthetic response. This response emerges, how-
ever, from negations, denials, and occultations: what is not seen, who is not
there, and what does not happen.3 Here again, when we look at nature we
behold things that are not there and miss “the nothing that is.”
Fully as much as Stevens in “The Snow Man,” Crane is concerned
with certain conventions of representation: personification, the pictur-
esque, the American sublime, and the melodramatic, which although it
does not inform “The Snow Man” is played on in Stevens’s “The Ameri-
can Sublime.” Crane’s story is intertextual with nature poetry, sentimental
poetry, hymns, and landscape art, as well as with Darwinism, theological
clichés, and, less obviously, theological actualities. For the most part these
conventions add up to what the Stevens poem declares is “not there.” To
get to “the nothing that is” we must first traverse this ocean of error. Doing
so helps keep our p.
Examine All Children Can Learn. Then, search the web for effec.docxcravennichole326
Examine
"All Children Can Learn"
. Then, search the web for effective, evidence-based differentiated strategies that are engaging, motivating, and address the needs of individual learners.
First, provide five evidence-based strategies:
Two instructional strategies (i.e., graphic organizers),
Two instructional tools (e.g., technology tool, device or iPad App, Web Quests, etc.),
One activity (e.g., Think-Pair-Share).
Second, for the two instructional strategies you listed explain how you can alter each to address the classroom needs you designed in Weeks One and Two and how the modification is relevant to the theory of differentiation.
.
More Related Content
Similar to Executive Compensation and IncentivesMartin J. ConyonEx.docx
Some executives who accumulate a substantial ownership position in the company hedge or pledge their shares to limit their financial risk. Should the board of directors allow this to occur?
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 ...
This Research Spotlight provides a summary of the academic literature on CEO pay levels in the United States. It reviews the evidence of:
• Long-term trends in the CEO compensation
• The relation between CEO compensation and governance quality
• The relation between peer group composition and CEO pay
• The relation between compensation consultant selection and CEO pay
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Compensation”.
111021, 137 PM Commentary - HRMN 395 7381 The Total RewardsBenitoSumpter862
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 1/19
Module 2: Core Elements of Monetary Rewards
Topics
Topic 1: What are Monetary Rewards?
Topic 2: Key Elements of Analysis and Documentation
Topic 3: Assessing and Rewarding Performance
Topic 4: Regulatory Aspects of Monetary Rewards
Topic 5: Philosophy of Market Positioning and Link to Total Rewards
Topic 6: Conclusions
Topic 1: What are Monetary Rewards?
The total rewards approach to compensation management is strategically planning a
targeted reward package to successfully attract, retain, and motivate segmented
populations of employees who possess the requisite knowledge, skills, and abilities (KSAs)
needed to achieve the organization's objectives. Table 1.2 in module 1 illustrates the
interdependent relationship of the components of the total rewards approach to
compensation. The table shares the three major components of total rewards, including
the monetary, non-monetary, and other elements of the work experience, which combine
strategically for the total rewards philosophy for the organization. Column 1 in Table 2.1
below shares many of the monetary rewards organizations offer today and will be
described in this module.
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#I
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#II
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#III
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#IV
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#V
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#VI
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 2/19
Table 2.1 Three Elements of the Total Rewards Model
Monetary Rewards
Non-monetary
Rewards
Work Experience
Base Pay
Income Protection
Benefits
Values of the Organization
Variable Pay Medical Insurance
Community (Individual
and Organizational)
Merit and Cost of
Living Increases
Vision and Dental Recognition
Retirement Savings Disability Training and Development
Performance
Feedback
Life Insurance Promotions
Deferred
Compensation
Paid Time Off Sense of Accomplishment
Day Care
Employee
Assistance
Program
Health Related
Programs
Tuition Assistance
Monetary Rewards
Monetary rewards are, unmistakably, a vital element of total rewards. Christofferson &
King (2006, p. 27) describe mometary rewards as "the pay provided by an employer to an
employee for services rendered ...
111021, 137 PM Commentary - HRMN 395 7381 The Total RewardsSantosConleyha
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 1/19
Module 2: Core Elements of Monetary Rewards
Topics
Topic 1: What are Monetary Rewards?
Topic 2: Key Elements of Analysis and Documentation
Topic 3: Assessing and Rewarding Performance
Topic 4: Regulatory Aspects of Monetary Rewards
Topic 5: Philosophy of Market Positioning and Link to Total Rewards
Topic 6: Conclusions
Topic 1: What are Monetary Rewards?
The total rewards approach to compensation management is strategically planning a
targeted reward package to successfully attract, retain, and motivate segmented
populations of employees who possess the requisite knowledge, skills, and abilities (KSAs)
needed to achieve the organization's objectives. Table 1.2 in module 1 illustrates the
interdependent relationship of the components of the total rewards approach to
compensation. The table shares the three major components of total rewards, including
the monetary, non-monetary, and other elements of the work experience, which combine
strategically for the total rewards philosophy for the organization. Column 1 in Table 2.1
below shares many of the monetary rewards organizations offer today and will be
described in this module.
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#I
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#II
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#III
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#IV
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#V
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn395/2218/modules/m2-module-2/s3-commentary.html?ou=615465#VI
11/10/21, 1:37 PM Commentary - HRMN 395 7381 The Total Rewards Approach to Compensation Management (2218)
https://learn.umgc.edu/d2l/le/content/615465/viewContent/22667815/View 2/19
Table 2.1 Three Elements of the Total Rewards Model
Monetary Rewards
Non-monetary
Rewards
Work Experience
Base Pay
Income Protection
Benefits
Values of the Organization
Variable Pay Medical Insurance
Community (Individual
and Organizational)
Merit and Cost of
Living Increases
Vision and Dental Recognition
Retirement Savings Disability Training and Development
Performance
Feedback
Life Insurance Promotions
Deferred
Compensation
Paid Time Off Sense of Accomplishment
Day Care
Employee
Assistance
Program
Health Related
Programs
Tuition Assistance
Monetary Rewards
Monetary rewards are, unmistakably, a vital element of total rewards. Christofferson &
King (2006, p. 27) describe mometary rewards as "the pay provided by an employer to an
employee for services rendered ...
Employers conduct compensation self-audits for a variety of reasons, ranging from obligations as a federal contractor to a desire for a deeper understanding of their compensation practices. Compensation self-audits are also frequently found as part of an employer’s risk management plan; self-audits allow an employer to identify potential problem areas and assess the extent of exposure in the event of compensation litigation.
Week One Discussion 500 Word Min.This weeks discussion covers .docxhelzerpatrina
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question:“What are the core competencies or skills an HRD manager must have, and how are they acquired? “
Week One
Discussion
:
500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16
-
19 in the course text
.
(Pictures Below)
Question:
“What
are the core competencies or skills an HRD manager must have, and how are they acquired
?
“
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question: “What are the core competencies or skills an HRD manager must have, and how are they acquired? “
MHR 6901, Compensation Management 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
5. Explain workers’ compensation.
5.1 Convince others that executive compensation is too high or is just right.
5.2 Identify compensation rules that apply to the flexible workforce.
Course/Unit
Learning Outcomes
Learning Activity
5.1 Unit VI Essay
5.2 Unit VI Quiz
Reading Assignment
Chapter 11: Compensating Executives
Chapter 12: Compensating the Flexible Workforce: Contingent Employees and Flexible Work Schedules
Unit Lesson
So far in this course, we have talked about how compensation is used and the components of a
compensation system. Let us review these a bit before we move into compensating executives.
Typically, compensation is used to recruit and retain highly qualified employees. The organization’s business
strategy (lead, lag, or match strategy) determines how the organization recruits and retains employees. A
good compensation system also increases morale or at least maintains employee satisfaction. As mentioned
earlier in the course, compensation systems include wages and benefits. A good compensation system is one
that evaluates the employees’ needs and makes adjustments, where possible, to meet those needs.
Employees who have their needs satisfied are more likely to be productive and loyal to the organization,
which, in turn, reduces costs for the organization. This is great for the average worker, but what about the
organization’s executives? Executive compensation is a challenge for most organizations and is a highly
controversial subject, especially after the government bailouts in 2008 and 2009.
Executive compensation is different than that for most salary or hourly employees and can consist of a variety
of options. It is generally focused on generating profits and long-term growth and is considered contingent
compensation, which means that the pay is structured to reward or pay based on th ...
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.
Similar to Executive Compensation and IncentivesMartin J. ConyonEx.docx (20)
Examine how nature is discussed throughout The Open Boat.” Loo.docxcravennichole326
Examine how nature is discussed throughout “The Open Boat.” Look at the literary critical piece by Anthony Channell Hilfer. Once you have established your own ideas, consider how Hilfer discusses nature in the short story and analyze the following questions: What does nature mean to the men aboard the boat? or Do their perceptions of nature shift throughout the story? Why or why not?
Do their perceptions of nature shift throughout the story? Why or why not?
Write down a loose response about what I think of the question and what I remember of the story.
ICE method.
I introduce the citation
C the citation itself
E explain its meaning to your argument.
The scenes shift with no discernable rhyme or reason. Crane invites every reader in. Critic Anthony Channell Hilfer disagrees with point, saying, “Crane’s image is an accusation of the putative picturesque spectators” (Hilfer 254). Hilfer’s challenge goes against what Crane is trying to do, by making nature a copilot through the reading.
3. Nature as Protagonist in “The Open Boat”
Anthony Channell Hilfer
Texas Studies in Literature and Language, Volume 54, Number 2, Summer
2012, pp. 248-257 (Article)
Published by University of Texas Press
DOI:
For additional information about this article
[ Access provided at 9 Apr 2020 17:36 GMT from Marymount University & (Viva) ]
https://doi.org/10.1353/tsl.2012.0012
https://muse.jhu.edu/article/476402
https://doi.org/10.1353/tsl.2012.0012
https://muse.jhu.edu/article/476402
Anthony Channell Hilfer248
3. Nature as Protagonist in “The Open Boat”
The bottom of the sea is cruel.
—Hart Crane, “Voyages”
As many critics have argued, questions of perspective and epistemology are
central to Stephen Crane’s “The Open Boat” (Kent; Hutchinson). The story’s
first sentence famously clues us to this: “None of them knew the color of
the sky” (68). But behind the uncertainties of perspective is a determinable
ontology, a presence, or rather, I shall argue, a sort of presence, the existence
of which implies a rectified aesthetic response. This response emerges, how-
ever, from negations, denials, and occultations: what is not seen, who is not
there, and what does not happen.3 Here again, when we look at nature we
behold things that are not there and miss “the nothing that is.”
Fully as much as Stevens in “The Snow Man,” Crane is concerned
with certain conventions of representation: personification, the pictur-
esque, the American sublime, and the melodramatic, which although it
does not inform “The Snow Man” is played on in Stevens’s “The Ameri-
can Sublime.” Crane’s story is intertextual with nature poetry, sentimental
poetry, hymns, and landscape art, as well as with Darwinism, theological
clichés, and, less obviously, theological actualities. For the most part these
conventions add up to what the Stevens poem declares is “not there.” To
get to “the nothing that is” we must first traverse this ocean of error. Doing
so helps keep our p.
Examine All Children Can Learn. Then, search the web for effec.docxcravennichole326
Examine
"All Children Can Learn"
. Then, search the web for effective, evidence-based differentiated strategies that are engaging, motivating, and address the needs of individual learners.
First, provide five evidence-based strategies:
Two instructional strategies (i.e., graphic organizers),
Two instructional tools (e.g., technology tool, device or iPad App, Web Quests, etc.),
One activity (e.g., Think-Pair-Share).
Second, for the two instructional strategies you listed explain how you can alter each to address the classroom needs you designed in Weeks One and Two and how the modification is relevant to the theory of differentiation.
.
Examine each of these items, which are available on the internet .docxcravennichole326
Examine each of these items, which are available on the internet:
1) for music, listen to the first movement of J.S. Bach's MAGNIFICAT; this is the High Baroque era. If you can find a performance with Sir John Eliot Gardiner and his Monteverdi Choir and the English Baroque soloists, go for it.
2) For art, find Giovanni Bellini's ST. FRANCIS IN THE DESERT; you might want to read up on the background of this wonderful painting. Not only St. Francis, but what else do you notice i the painting?
3) For architecture, look at the church at Melk Abbey, Austria; BE SURE to look at the interior shots. Again,
this is high Baroque--but in post-Reformation Catholicism, it had a political aim, too; can you figure it out?
After you have analyzed these, telling what you think the artists/musicians valued and were trying to express, tell me what
YOU think about them! Remember, if you read up on these items, LIST THE WORKS YOU CONSULTED! That way, you avoid plagiarism.
write a 1-page paper on each of these three, telling 1) where they found this value, 2) why it was important “back then,” and 3) is it still around today.
.
Examine a web browser interface and describe the various forms .docxcravennichole326
Examine a web browser interface and describe the various forms of analogy and composite interface metaphors that have been used in its design. What familiar knowledge has been combined with new functionality? need a couple of paragraphs.. and one reference
need this in the next 4 hours..
.
Examine a scenario that includes an inter-group conflict. In this sc.docxcravennichole326
Examine a scenario that includes an inter-group conflict. In this scenario, you are recognized as an authority in cross-cultural psychology and asked to serve as a consultant to help resolve the conflict. You will be asked to write up your recommendations in a 6-page paper not including your title and reference page.
Darley, J.M. & Latané, B. (1968). Bystander interview in emergencies: Diffusion of responsibility.
Journal of Personality and Social Psychology, 8
(4), 377-383.
Scenario: Culture, Psychology, and Community
Imagine an international organization has approached you to help resolve an inter-group conflict. You are an authority in cross-cultural psychology and have been asked to serve as a consultant based on a recent violent conflict involving a refugee community in your town and a local community organization. In the days, weeks, and months leading up to the violent conflict, there were incidents of discrimination and debates regarding the different views and practices people held about work, family, schools, and religious practice. Among the controversies has been the role of women’s participation in political, educational, and community groups
.
Part 1: Developing an Understanding
(2 pages)
Based on the scenario, explain how you can help integrate the two diverse communities so that there is increased understanding and appreciation of each group by the other group. (
Note
: Make sure to include in your explanation the different views and practices of cultural groups as well as the role of women.)
Based on your knowledge of culture and psychology, provide three possible suggestions/solutions that will help the community as a whole. In your suggestions make sure to include an explanation regarding group think and individualism vs. collectivism.
Part 2: Socio-Emotional, Cognitive, and Behavioral Aspects
(2 pages)
Based on your explanations in Part 1, how do your suggestions/solutions impact the socio-emotional, cognitive, and behavior aspects of the scenario and why?
Part 3: Gender, Cultural Values and Dimensions, and Group Dynamics
(2 pages)
Explain the impact of gender, cultural values and dimensions, and group dynamics in the scenario.
Further explain any implications that may arise from when working between and within groups.
Support your Assignment by citing all resources in APA style, including those in the Learning Resources.
.
Examine a current law, or a bill proposing a law, that has to do wit.docxcravennichole326
Examine a current law, or a bill proposing a law, that has to do with technology and criminal activity. The law can be at the state or federal level. Identify the law or bill, where it comes from, and its purpose or intent. Next, identify positive outcomes if the law is successful. Finally, identify at least two unintended consequences that the law could bring about. . . DUE 4/18, 2021
.
Exam IT 505Multiple Choice (20 questions , 2 points each)Pleas.docxcravennichole326
Exam IT 505
Multiple Choice (20 questions , 2 points each)
Please Submit a word document of your exam. Please DO NOT repeat the questions. Only submit your answers for example 1.A, 2. B……Ect
1. Which of the following is NOT one of the typical characteristics of back-end networks?
A. high data rate B. high-speed interface
C. distributed access D. extended distance
2. Problems with using a single Local Area Network (LAN) to interconnect devices
on a premise include:
A. insufficient reliability, limited capacity, and inappropriate network
interconnection devices
B. insufficient reliability, limited capacity, and limited distances
C. insufficient reliability, limited distances, and inappropriate network
interconnection devices
D. limited distances, limited capacity, and inappropriate network
interconnection devices
3. Which of following is NOT one of the designs that determines data rate and
distance?
A. the number of senders B. the number of receivers
C. transmission impairment D. bandwidth
4. The fact that signal strength falls off with distance is called ________________.
A. bandwidth B. attenuation
C. resistance D. propagation
5. Which of the following is NOT one of the distinguishing characteristics for optical
fiber cables compared with twisted pair or coaxial cables?
A. greater capacity B. lower attenuation
C. electromagnetic isolation D. heavier weight
6.________ is a set of function and call programs that allow clients and servers to intercommunicate.
A. IaaS B. SQL C. API D. Middleware
7. A computer that houses information for manipulation by networked clients is a __________.
A. server B. minicomputer C. PaaS D. broker
8. ________ is software that improves connectivity between a client application and a server.
A. SQL B. API C. Middleware D. SAP
9. The inability of frame relay to do hop by hop error control is offset by:
A. its gigabit speeds B. its high overhead
C. the extensive use of in-band signaling D. the increasing reliability of networks
10. All Frame Relay nodes contain which of the following protocols?
A. LAPB B. LAPD
C. LAPF Core D. LAPF Control
11. The technique employed by Frame Relay is called __________.
A. inband signaling B. outband signaling
C. common channel signaling D. open shortest path first routing
12. In ATM, the basic transmission unit is the ________.
A. frame B. cell
C. packet D. segment
13. When using ATM, which of the following is NOT one of the advantages for the
use of virtual paths?
A. less work is needed to set a virtual path
B. the network architecture is simplified
C.
EXAM
Estructura 8.1 - Miniprueba A
Verbos
Complete the chart with the correct verb forms.
infinitivo
seguir
(1) [removed]
yo
(2) [removed]
morí
tú
seguiste
(3) [removed]
nosotras
seguimos
(4) [removed]
ellos
(5) [removed]
murieron
Completar
Fill in the blanks with the correct preterite forms of the verbs in parentheses.
Diego y Javier [removed] (conseguir) un mapa.
Esta mañana usted [removed] (despedirse) de los estudiantes.
Tú [removed] (sentirse) mal ayer.
La semana pasada yo no [removed] (dormir) bien.
Amparo [removed] (preferir) comer en casa.
Oraciones
Write sentences using the information provided. Use the preterite and make any necessary changes.
Modelo
Edgar / preferir / pollo asado
Edgar prefirió el pollo asado.
Álvaro y yo / servir / los entremeses
[removed]
¿quién / repetir / las instrucciones?
[removed]
ayer / yo / despedirse / de / mis sobrinos
[removed]
ustedes / dormirse / a las diez
[removed]
La cena
Fill in the blanks with the preterite form of the appropriate verbs from the list. Four verbs will not be used.
abrir
conseguir
escoger
leer
mirar
pedir
preferir
probar
repetir
sentirse
servir
vestirse
Anoche Jorge, Iván y yo salimos a cenar a Mi Tierra, un restaurante guatemalteco. Nosotros
(1) [removed]
este lugar porque Jorge
(2) [removed]
una reseña (
review
) en Internet que decía (
said
) que la comida es auténtica y muy sabrosa. No es un restaurante elegante; entonces nosotros
(3) [removed]
de bluejeans. De verdad, en Mi Tierra mis amigos y yo
(4) [removed]
como (
like
) en casa. El camarero que nos
(5) [removed]
fue muy amable. Para empezar, Jorge e Iván
(6) [removed]
tamales, pero yo
(7) [removed]
esperar el plato principal: carne de res con arroz y frijoles. Comimos tanto (
so much
) que no
(8) [removed]
nada de postre (
dessert
). ¡Fue una cena deliciosa!
.
Examine current practice guidelines related to suicide screeni.docxcravennichole326
Examine current practice guidelines related to suicide screening and prevention and how they could pertain to John.
Choose two of the following questions to answer as part of your initial post.
What events in John's life created a "downward spiral" into homelessness and hopelessness? Which events were related to social needs, mental health needs, and medical needs, and which could health care have addressed?
What were some of the barriers John faced in accessing medical care and mental health care?
How does homelessness and mental illness intersect? Do you believe homelessness may develop because of a mental health issue, or do you believe those who become homeless eventually sink into psychological despair?
The tipping point for many people who live at the margins of society may be things that could have been managed given the right support. How can your role as an APRN help identify, alleviate, or support those who are in need like John?
In your own experience, have you encountered a homeless individual? What was that like? Do you recall what you were thinking?
Please include at least three scholarly sources within your initial post.
Rubric:
Discussion Question Rubric
Note:
Scholarly resources are defined as evidence-based practice, peer-reviewed journals; textbook (do not rely solely on your textbook as a reference); and National Standard Guidelines. Review assignment instructions, as this will provide any additional requirements that are not specifically listed on the rubric.
Discussion Question Rubric – 100 PointsCriteriaExemplary
Exceeds ExpectationsAdvanced
Meets ExpectationsIntermediate
Needs ImprovementNovice
InadequateTotal PointsQuality of Initial PostProvides clear examples supported by course content and references.
Cites three or more references, using at least one new scholarly resource that was not provided in the course materials.
All instruction requirements noted.
40 points
Components are accurate and thoroughly represented, with explanations and application of knowledge to include evidence-based practice, ethics, theory, and/or role. Synthesizes course content using course materials and scholarly resources to support importantpoints.
Meets all requirements within the discussion instructions.
Cites two references.
35 points
Components are accurate and mostly represented primarily with definitions and summarization. Ideas may be overstated, with minimal contribution to the subject matter. Minimal application to evidence-based practice, theory, or role development. Synthesis of course content is present but missing depth and/or development.
Is missing one component/requirement of the discussion instructions.
Cites one reference, or references do not clearly support content.
Most instruction requirements are noted.
31 points
Absent application to evidence-based practice, theory, or role development. Synthesis of course content is superficial.
Demonstrates incomplete understandin.
Examine Case Study Pakistani Woman with Delusional Thought Processe.docxcravennichole326
Examine Case Study: Pakistani Woman with Delusional Thought Processes.
You will be asked to make three decisions concerning the medication to prescribe to this client. Be sure to consider factors that might impact the client’s pharmacokinetic and pharmacodynamic processes.
At each decision point stop to complete the following:
Decision #1
Which decision did you select?
Why did you select this decision? Support your response with evidence and references to the Learning Resources.
What were you hoping to achieve by making this decision? Support your response with evidence and references to the Learning Resources.
Explain any difference between what you expected to achieve with Decision #1 and the results of the decision. Why were they different?
Decision #2
Why did you select this decision? Support your response with evidence and references to the Learning Resources.
What were you hoping to achieve by making this decision? Support your response with evidence and references to the Learning Resources.
Explain any difference between what you expected to achieve with Decision #2 and the results of the decision. Why were they different?
Decision #3
Why did you select this decision? Support your response with evidence and references to the Learning Resources.
What were you hoping to achieve by making this decision? Support your response with evidence and references to the Learning Resources.
Explain any difference between what you expected to achieve with Decision #3 and the results of the decision. Why were they different?
Also include how ethical considerations might impact your treatment plan and communication with clients.
BACKGROUND
The client is a 34-year-old Pakistani female who moved to the United States in her late teens/early 20s. She is currently in an “arranged” marriage (her husband was selected for her since she was 9 years old). She presents to your office today following a 21 day hospitalization for what was diagnosed as “brief psychotic disorder.” She was given this diagnosis as her symptoms have persisted for less than 1 month.
Prior to admission, she was reporting visions of Allah, and over the course of a week, she believed that she was the prophet Mohammad. She believed that she would deliver the world from sin. Her husband became concerned about her behavior to the point that he was afraid of leaving their 4 children with her. One evening, she was “out of control” which resulted in his calling the police and her subsequent admission to an inpatient psych unit.
During today’s assessment, she appears quite calm, and insists that the entire incident was “blown out of proportion.” She denies that she believed herself to be the prophet Mohammad and states that her husband was just out to get her because he never loved her and wanted an “American wife” instead of her. She tells you that she knows this because the television is telling her so.
She currently weighs .
Examination of Modern LeadershipModule 1 Leadership History, F.docxcravennichole326
Examination of Modern Leadership
Module 1: Leadership: History, Fundamentals, and the Modern Context
Module 1 content establishes the context for the entire course dedicated to the examination of modern and postmodern leadership. The introduction of critical theory and its use in ORG561 provides a framework for investigation. The context of social, economic, political, and technological environments informs an exploration of modern and postmodern leadership approaches. Emphasis on leader self-awareness sets the stage for reflection, introspection, and personal leadership development.
Learning Outcomes
1. Compare and contrast historical leadership concepts against modern and postmodern organization needs.
2. Analyze leadership approaches using a critical framework.
3. Construct a personal leadership biography.
For Your Success & Readings
A key to success in ORG561 is to start early, build, reflect, reinforce, build, reflect, and reinforce.
Begin each week’s study by reading and comprehending the learning outcomes. Learning outcomes are always revealed in assignments, discussions, and lectures. Likewise, learning outcomes are reflected in rubrics, which are used as objective measures for scoring and grading. Establish the learning outcomes as your checklist for success.
In Module 1 criticaltheory is introduced through the readings, lecture, discussion, and Critical Thinking Assignment. The critical approach provides new frameworks on which to research leadership. You may not be familiar with critical inquiry, so seize the opportunity to advance your analytic skills. You are expected to use one or more critical frames in each module of this course. Take the time this week to fully understand the reasoning and context of critical theory.
Studying the history of leadership requires reading publications from earlier eras. Notice that some of the required and recommended readings for Module 1 are not current publications, but these contribute to understanding the earlier periods of organization and leadership study.
Postmodern leadership literature expounds on the notion that self-awareness is a critical component required to lead. In ORG561, the thread of self-examination is woven throughout the course. You will have opportunities to move beyond reflection to develop a better understanding of personal assumptions and biases, skills and competencies, and professional development plans, all related to leadership. Embrace the opportunity!
Required
· Introduction and Chapters 1 & 2 in Leadership: A Critical Text
· Axley, S. R. (1990). The practical qualities of effective leaders. Industrial Management, 32(5), 29-31.
· Brocato, B., Jelen, J., Schmidt, T., & Gold, S. (2011). Leadership conceptual ambiguities.Journal of Leadership Studies, 5(1), 35-50. doi:10.1002/jls.20203
· Gandolfi, F., & Stone, S. (2016). Clarifying leadership: High-impact leaders in a time of leadership crisis. Revista De Management Comparat International, 17(3), 212-224.
· Blom, M. .
Examine current international OB issues that challenge organizat.docxcravennichole326
Examine current international OB issues that challenge organizational leaders to resolve critical issues involving cross-cultural communication, negotiation, leadership, motivation, decision-making, among others.
(1) identify the key organizational behavior issues facing management,
(2) what impact the international environment has on these issues,
(3) strategies management should use to overcome these issues,
(4) how these strategies will impact the overall organizational operations, and
(5) identify the potential costs and risks to the organizations of implementing the newly developed strategies.
Offer a set of recommendations, which must be derived from both data and theory. Teams must include aspects of global leadership, global motivation and global team-management in their work.
APA format, Times New Roman (12), 20-25 pages, No plagiarism.
.
Executive Program Practical Connection Assignment .docxcravennichole326
Executive Program Practical Connection Assignment
Component Proficient (15 to 20 points) Competent (8 to 14 points) Novice (1 to 7 points) Score
Assignment
Requirements
Student completed all required
portions of the assignment
Completed portions of the
assignment
Did not complete the required
assignment.
Writing Skills,
Grammar, and APA
Formatting
Assignment strongly demonstrates
graduate-level proficiency in
organization, grammar, and style.
Assignment is well written, and ideas
are well developed and explained.
Demonstrates strong writing skills.
Student paid close attention to spelling
and punctuation. Sentences and
paragraphs are grammatically correct.
Proper use of APA formatting. Properly
and explicitly cited outside resources.
Reference list matches citations.
Assignment demonstrates graduate-
level proficiency in organization,
grammar, and style.
Assignment is effectively
communicated, but some sections
lacking clarity. Student paid some
attention to spelling and
punctuation, but there are errors
within the writing. Needs attention
to proper writing skills.
Use of APA formatting and citations
of outside resources, but has a few
instances in which proper citations
are missing.
Assignment does not demonstrate
graduate-level proficiency in
organization, grammar, and style.
Assignment is poorly written and
confusing. Ideas are not
communicated effectively. Student
paid no attention to spelling and
punctuation. Demonstrates poor
writing skills.
The assignment lacks the use of APA
formatting and does not provide
proper citations or includes no
citations.
Maintains
purpose/focus
Submission is well organized and has a
tight and cohesive focus that is
integrated throughout the document
Submissions has an organizational
structure and the focus is clear
throughout.
Submission lacks focus or contains
major drifts in focus
Understanding of
Course Content
Student demonstrates understand of
course content and knowledge.
Student demonstrates some
understanding of course content
and knowledge.
Student does not demonstrate
understanding of course content and
knowledge.
Work Environment
Application
Student strongly demonstrates the
practical application, or ability to apply,
of course objectives within a work
environment.
Student demonstrates some
practical application, or ability to
apply, of course objectives within a
work environment.
Student does not demonstrate the
practical application, or ability to
apply, of course objectives within a
work environment.
Executive Program Practical Connection Assignment
At UC, it is a priority that students are provided with strong educational programs and courses that
allow them to be servant-leaders in their disciplines and communities, linking research with practice and
kn.
Executive Program Practical Connection Assignment Component .docxcravennichole326
Executive Program Practical Connection Assignment
Component
Proficient (15 to 20 points)
Competent (8 to 14 points)
Novice (1 to 7 points)
Score
Assignment Requirements
Student completed all required portions of the assignment
Completed portions of the assignment
Did not complete the required assignment.
Writing Skills, Grammar, and APA Formatting
Assignment strongly demonstrates graduate-level proficiency in organization, grammar, and style.
Assignment is well written, and ideas are well developed and explained. Demonstrates strong writing skills. Student paid close attention to spelling and punctuation. Sentences and paragraphs are grammatically correct.
Proper use of APA formatting. Properly and explicitly cited outside resources. Reference list matches citations.
Assignment demonstrates graduate-level proficiency in organization, grammar, and style.
Assignment is effectively communicated, but some sections lacking clarity. Student paid some attention to spelling and punctuation, but there are errors within the writing. Needs attention to proper writing skills.
Use of APA formatting and citations of outside resources, but has a few instances in which proper citations are missing.
Assignment does not demonstrate graduate-level proficiency in organization, grammar, and style.
Assignment is poorly written and confusing. Ideas are not communicated effectively. Student paid no attention to spelling and punctuation. Demonstrates poor writing skills.
The assignment lacks the use of APA formatting and does not provide proper citations or includes no citations.
Maintains purpose/focus
Submission is well organized and has a tight and cohesive focus that is integrated throughout the document
Submissions has an organizational structure and the focus is clear throughout.
Submission lacks focus or contains major drifts in focus
Understanding of Course Content
Student demonstrates understand of course content and knowledge.
Student demonstrates some understanding of course content and knowledge.
Student does not demonstrate understanding of course content and knowledge.
Work Environment Application
Student strongly demonstrates the practical application, or ability to apply, of course objectives within a work environment.
Student demonstrates some practical application, or ability to apply, of course objectives within a work environment.
Student does not demonstrate the practical application, or ability to apply, of course objectives within a work environment.
.
Executive Program Group Project Assignment Component Profi.docxcravennichole326
Executive Program Group Project Assignment
Component
Proficient (15 to 20 points)
Competent (8 to 14 points)
Novice (1 to 7 points)
Score
Assignment Requirements
Student completed all required portions of the assignment
Completed portions of the assignment
Did not complete the required assignment.
Writing Skills, Grammar, and APA Formatting
Assignment strongly demonstrates graduate-level proficiency in organization, grammar, and style.
Assignment is well written, and ideas are well developed and explained. Demonstrates strong writing skills. Student paid close attention to spelling and punctuation. Sentences and paragraphs are grammatically correct.
Proper use of APA formatting. Properly and explicitly cited outside resources. Reference list matches citations.
Assignment demonstrates graduate-level proficiency in organization, grammar, and style.
Assignment is effectively communicated, but some sections lacking clarity. Student paid some attention to spelling and punctuation, but there are errors within the writing. Needs attention to proper writing skills.
Use of APA formatting and citations of outside resources, but has a few instances in which proper citations are missing.
Assignment does not demonstrate graduate-level proficiency in organization, grammar, and style.
Assignment is poorly written and confusing. Ideas are not communicated effectively. Student paid no attention to spelling and punctuation. Demonstrates poor writing skills.
The assignment lacks the use of APA formatting and does not provide proper citations or includes no citations.
Maintains purpose/focus
Submission is well organized and has a tight and cohesive focus that is integrated throughout the document
Submissions has an organizational structure and the focus is clear throughout.
Submission lacks focus or contains major drifts in focus
Understanding of Course Content
Student demonstrates understand of course content and knowledge.
Student demonstrates some understanding of course content and knowledge.
Student does not demonstrate understanding of course content and knowledge.
Work Environment Application
Student strongly demonstrates the practical application, or ability to apply, of course objectives within a work environment.
Student demonstrates some practical application, or ability to apply, of course objectives within a work environment.
Student does not demonstrate the practical application, or ability to apply, of course objectives within a work environment.
Criteria Excellent Satisfactory Less than Satisfactory Not Completed
Log
Completion
4 points
Food logs are
complete with detailed
food/beverage items
3 points
Food logs are
complete but lack
some detail on
food/beverage items
(3 pts)
2 points
Food logs are
complete are missing
substantial detail on
food/beverage items
0 points
Student did not
complete this
component of the
project.
/ 4
Por.
Executive Practical Connection Activityit is a priority that stu.docxcravennichole326
Executive Practical Connection Activity
it is a priority that students are provided with strong educational programs and courses that allow them to be servant-leaders in their disciplines and communities, linking research with practice and knowledge with ethical decision-making. This assignment is a written assignment where students will demonstrate how this course research has connected and put into practice within their own career.
Assignment:
Provide a reflection of at least 500 words (or 2 pages double spaced) of how the knowledge, skills, or theories of this course have been applied, or could be applied, in a practical manner to your current work environment. If you are not currently working, share times when you have or could observe these theories and knowledge could be applied to an employment opportunity in your field of study.
Requirements:
· Provide a 500 word (or 2 pages double spaced) minimum reflection.
· Use of proper APA formatting and citations. If supporting evidence from outside resources is used those must be properly cited.
· Share a personal connection that identifies specific knowledge and theories from this course.
· Demonstrate a connection to your current work environment. If you are not employed, demonstrate a connection to your desired work environment.
· You should NOT, provide an overview of the assignments assigned in the course. The assignment asks that you reflect how the knowledge and skills obtained through meeting course objectives were applied or could be applied in the workplace.
MY ROLE: BIGDATA/KAFKA ADMIN
Need Plagiarism report for this Assignement.
****Directions
Choose from one of the following tweets and answer the 4 questions, Include at least one scholarly source***** The link is included in each tweet for more information.
1. Identify a healthcare issue within your community and explain the issue to your class colleagues. (You may use the same issue you identified in Week 2, but please expand your responses to address this week's focus).
2. Describe the type of healthcare policy you would advocate for in an effort to change this issue.
3. What type of campaign would you need to launch in order to gather a network of support?
4. Compose a Tweet that describes what you have shared with your class colleagues. Remember, Twitter only allows for 140 characters so you will need to be concise.
1. NR708HealthPol Retweeted
Tara Heagele, PhD, RN, PCCN, EMT@TaraHeagele
#NurseTwitter Hurricane season starts today! Helping Vulnerable People Before Disasters Strike | Campaign for Action https://campaignforaction.org/helping-vulnerable-people-before-disasters-strike/#.XtUB00-UAZ4.twitter …
Helping Vulnerable People Before Disasters Strike | Campaign for Action
Floods, tornadoes, heat waves, blizzards, earthquakes, and hurricanes threaten the health and well-being of millions of people each year
campaignforaction.org
13h
·
·
2. NR708HealthPol Retweeted
Diana Mason@djmasonrn
By @AmyAnderso.
Executive FunctionThe Search for an Integrated AccountMari.docxcravennichole326
Executive Function
The Search for an Integrated Account
Marie T. Banich
Department of Psychology & Neuroscience, and Institute of Cognitive Science, University of Colorado at Boulder;
Department of Psychiatry, University of Colorado Denver
ABSTRACT—In general, executive function can be thought
of as the set of abilities required to effortfully guide be-
havior toward a goal, especially in nonroutine situations.
Psychologists are interested in expanding the under-
standing of executive function because it is thought to be a
key process in intelligent behavior, it is compromised in a
variety of psychiatric and neurological disorders, it varies
across the life span, and it affects performance in compli-
cated environments, such as the cockpits of advanced
aircraft. This article provides a brief introduction to the
concept of executive function and discusses how it is
assessed and the conditions under which it is compromised.
A short overview of the diverse theoretical viewpoints re-
garding its psychological and biological underpinnings is
also provided. The article concludes with a consideration
of how a multilevel approach may provide a more inte-
grated account of executive function than has been previ-
ously available.
KEYWORDS—executive function; frontal lobe; prefrontal
cortex; inhibition; task switching; working memory; atten-
tion; top-down control
Like other psychological constructs, such as memory, executive
function is multidimensional. As such, there exists a variety of
models that provide varying viewpoints as to its basic component
processes. Nonetheless, common across most of them is the idea
that executive function is a process used to effortfully guide
behavior toward a goal, especially in nonroutine situations.
Various functions or abilities are thought to fall under the rubric
of executive function. These include prioritizing and sequencing
behavior, inhibiting familiar or stereotyped behaviors, creating
and maintaining an idea of what task or information is most
relevant for current purposes (often referred to as an attentional
or mental set), providing resistance to information that is dis-
tracting or task irrelevant, switching between task goals, uti-
lizing relevant information in support of decision making,
categorizing or otherwise abstracting common elements across
items, and handling novel information or situations. As can be
seen from this list, the functions that fall under the category of
executive function are indeed wide ranging.
ASSESSING EXECUTIVE FUNCTION
The very nature of executive function makes it difficult to
measure in the clinic or the laboratory; it involves an individual
guiding his or her behavior, especially in novel, unstructured,
and nonroutine situations that require some degree of judgment.
In contrast, standard testing situations are structured—partic-
ipants are explicitly told what the task is, given rules for per-
forming the task, and provide.
Executing the StrategyLearning ObjectivesAfter reading.docxcravennichole326
Executing the Strategy
Learning Objectives
After reading this chapter, you should be able to:
• Distinguish good operational plans from weak ones.
• Detail the value of tracking progress on all operational plans.
• Discuss why emergent strategies occur and how they might affect an organization’s
current strategy.
• Implement the ten basic steps of a generic strategic formulation process.
• Manage, improve, and evaluate an existing strategic management process.
Chapter 9
Neil Webb/Ikon Images/Getty Images
spa81202_09_c09.indd 247 1/16/14 10:08 AM
CHAPTER 9Section 9.1 Managing Operational Plans
Implementing a strategy (see Figure 1.1) in the real world is not a leisurely swim across
a calm pond on a sunny day, but rather like crossing from one bank of a raging river to
the other, encountering hidden eddies, fog, driving rain, lightning, and riptides along the
way. While it is not impossible to reach the other bank (the goal), the task often becomes
one of overcoming obstacles and making constant adjustments without losing sight of the
goal. Implementation is like that. Even the most brilliant strategy is worthless if it cannot
be implemented.
This chapter focuses on strategy execution and its difficulties. Part of the chapter is devoted
to assessing, improving, and managing the strategy formulation process itself.
9.1 Managing Operational Plans
The process for obtaining board approval of operational plans is covered in this chapter.
Exactly what is it that gets approved? An operational plan is a document that specifies the
projects or tasks that must be accomplished to achieve particular operational objectives.
Many of these plans will contain activities that are ongoing. Some will include plans for
enhanced or new services. Details specified in operational plans include the names of those
who will be involved and the indi-
vidual responsible for each one, what
equipment will be needed, when each
will start and end, and the estimated
costs for each activity. Given the level
of detail required, it should come as
no surprise that an operational plan
for a large functional unit, such as the
nursing department in a hospital, can
run to many pages, as there are lots of
activities to be detailed. Operational
plans for small HSOs such as physi-
cian clinics and community health
centers may be just a few pages long
unless new strategic initiatives are to
be undertaken.
It takes contributions from everyone
who will be involved in that HSO’s
operations to create such plans. They
will make sure that continuing cur-
rent operations are included in the plans, which is easily done. What adds a level of com-
plexity and difficulty is incorporating additional tasks demanded by a change in strategy.
Consider the following scenarios, which illustrate the difficulty in creating operational
plans that involve more than simply repeating what was done the previous year:
Javier Larrea/age fotostock/Getty Ima.
Executing Strategies in a Global Environment Examining the Case of .docxcravennichole326
Executing Strategies in a Global Environment: Examining the Case of Federal Express 5-7 pages
Requirements:
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Exclussively For KIN WOODS ONLYQUESTION1Discuss how the social.docxcravennichole326
Exclussively For KIN WOODS ONLY
QUESTION1
Discuss how the social growth and development in infancy are related to the development of the five senses (hearing, sight, taste, smell, and touch) and speech. [300 word count, 2 References, 2 Citations, Original Academic Writing only]
QUESTION 2
Analyze the significant developments of each substage in Piaget’s stage of Sensorimotor development; explain in terms of object permanence and imitation. Contrast these with information-processing perspectives. [300 word count, 2 References, 2 Citations, Original Academic Writing only]
.
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
For more information, visit-www.vavaclasses.com
Ethnobotany and Ethnopharmacology:
Ethnobotany in herbal drug evaluation,
Impact of Ethnobotany in traditional medicine,
New development in herbals,
Bio-prospecting tools for drug discovery,
Role of Ethnopharmacology in drug evaluation,
Reverse Pharmacology.
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Chapter 3 - Islamic Banking Products and Services.pptx
Executive Compensation and IncentivesMartin J. ConyonEx.docx
1. 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
2. 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
3. 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 to provide CEOs
with incentives to align their mutual interests. This
is the contract approach to executive pay. Following
Core, Guay, and Larcker,8 an efficient (or optimal)
contract is one “that maximizes the net expected
economic value to shareholders after transaction
costs (such as contracting costs) and payments to
employees. An equivalent way of saying this is that
. . . contracts minimize agency costs.”
Several important ideas flow from this defini-
tion. First, the contract reduces manager oppor-
tunism and motivates CEO effort by providing in-
centives through risky compensation such as stock
options. Second, the optimal contract does not im-
ply a “perfect” contract, only that the firm designs
the best contract it can in order to avoid opportun-
ism and malfeasance by the manager, given the
* Martin Conyon is an Assistant Professor of Management at the
Wharton School, University of Pennsylvania. Contact:
[email protected]
2006 25Conyon
contracting constraints it faces.9 Third, in this ar-
rangement, the firm does not necessarily eliminate
agency costs, but instead evaluates the (marginal)
benefits of implementing the contract relative to the
(marginal) costs of doing so. Improvements in regu-
4. lation or corporate governance can possibly alter
these costs and benefits, making different contracts
desirable. Moreover, what is efficient at one point in
time may not be at another. Improvements in board
governance, for example by adding independent di-
rectors, may lead to different patterns of compensa-
tion, stock, and option contracts that are desirable
for one firm but not another.10
An alternative theory is that CEOs set pay.
This is the managerial power view, exemplified
recently by Bebchuk and Fried.11 In this theory,
the board and compensation committee cooperate
with the CEO and agree on excessive compensa-
tion, settling on contracts that are not in share-
holders’ interests. This excess pay constitutes an
economic rent, an amount greater than necessary
to get the CEO to work in the firm. The con-
straints the CEOs face are reputation loss and
embarrassment if caught extracting rents, what
Bebchuk and Fried call “outrage costs.” Outrage
matters because it can impose on CEOs both
market penalties (such as devaluation of a man-
ager’s reputation) and social costs—the social
costs come on top of the standard market costs.
They argue that market constraints and the social
costs coming from excessively favorable pay ar-
rangements are not sufficient in preventing con-
siderable deviations from optimal contracting.
This paper begins by demonstrating what has
happened to executive pay in the United States.
The next section provides evidence on the growth
of executive pay and equity incentives in U.S.
publicly traded firms between 1992 and 2003.
Specifically, we focus on the importance of stock
5. and options and the link between pay and perfor-
mance. We consider explanations for why CEO
pay and incentives increased remarkably during
the 1990s. Then, the paper considers the gover-
nance of executive pay, especially the role of
independent boards and compensation commit-
tees. We show that compensation committees
have become more independent over time and the
fraction of affiliated directors on boards has de-
clined. The paper ends by offering some conclu-
sions about whether the current pattern of exec-
utive pay and incentives in the United States is
consistent with economic theory.
Executive Compensation
T
here is substantial disclosure about U.S. exec-
utive compensation. The Securities and Ex-
change Commission (SEC) expanded and en-
hanced disclosure rules for U.S. executives in
1992. As a result, the proxy statements of firms
(DEF 14A) contain considerable detail on stock
ownership, stock options, and all components of
compensation for the top five corporate execu-
tives.12 The evidence on U.S. executive compen-
sation provided here was extracted from Standard
and Poor’s (S&P’s) “ExecuComp” database, which
includes proxy-statement data for top executives
in the S&P 500, S&P Mid-Cap 400, S&P Small-
Cap 600, and other supplemental S&P indices.
We focus on CEO and non-CEO executives sep-
arately. We used information on share ownership,
current and prior option grants, salaries, annual
6. bonuses, benefits, and restricted stock awards, in
order to observe component growth.
There are four basic components to executive
pay, each having been the subject of much re-
search.13 First, executives receive a base salary,
which is generally benchmarked against peer
firms. Second, they enjoy an annual bonus plan,
usually based on accounting performance mea-
sures. Third, executives receive stock options,
which represent a right, but not the obligation, to
purchase shares in the future at some pre-specified
exercise price. Lastly, pay includes additional
compensation such as restricted stock, long-term
incentive plans, and retirement plans.
Stock options are an important element of ex-
ecutive pay and are valued at the firm’s cost of
making the grant.14 Options are valued as the
economic cost to the firm of granting an option to
an employee. This is the opportunity cost forgone
by not selling the option in the open market. A
good approximation of this value is the price of
the option given by the Black-Scholes (1973)
formula.15 The value of a European call option
paying dividends is: option value � c � Se-qt
N(d1) – Xe
-rt N(d2), where d1 � {ln(S/X) � (r �
26 FebruaryAcademy of Management Perspectives
q � �2/2)t}/��t, d2 � d1 � ��t, where S is the
stock price; X the exercise price; t the maturity
7. term; r the risk-free interest rate; q the dividend
yield; � the volatility of returns; and N(.) the
cumulative probability distribution function for a
standardized normal variable. In general, options
granted to executives have an expected cost to the
company of about 30 to 40 percent of the fair
market value of the stock. For instance, given
some plausible assumptions about inputs, an op-
tion on a stock with face value of $100 has an
expected value of about $37.16
However, some of the assumptions underlying
the Black-Scholes method are unlikely to hold in
practice, meaning that employees will value an
option differently from the firm. Employees are
typically risk averse, undiversified, and may be
disallowed from trading the options or hedging
their risk by selling short the company stock. In
consequence, they will place a lower value on the
stock option compared to the Black-Scholes cost
to the company.17 This gap is an estimate of the
premium that firms must pay employees to accept
the risky option versus cash compensation. Firms
will want to make sure that the increase in exec-
utive performance from using options exceeds this
premium.18 Understanding how employees value
options is an important challenge for future com-
pensation research, especially since stock options
are an increasingly significant component of pay.19
Before considering the general pattern of exec-
utive compensation, consider a few examples.
Many CEOs, such as Jack Welch of General Elec-
tric, receive large pay awards. In 2000, he received
total compensation of about $125 million, includ-
ing a $4 million salary, a $12.7 million bonus, $57
8. million in options, and $48.7 million in restricted
stock grants. Welch managed a large and complex
organization and, under his leadership, General
Electric’s share price soared. However, in the wake
of U.S. corporate scandals, like Enron and Tyco,
even CEOs with stellar performance records have
faced criticism: the media censured Welch for
alleged non-disclosure of lavish retirement bene-
fits. Another example indicates a somewhat un-
usual pay arrangement. In 2003, Steve Jobs of
Apple Computer received a salary of just $1 and
no annual bonus or options, instead receiving re-
stricted stock grants worth approximately $75 mil-
lion. These cases show that the way in which CEOs
are paid can differ across firms and that some pay
packages are riskier than others. Options and stock
provide powerful incentives to focus on increasing
shareholder wealth. If a CEO is paid in options, then
as the share price increases, the value of their hold-
ings also increases; if the share price declines, so too
does the CEO’s wealth. Salaries, in contrast, are
unrelated to firm performance.
As noted above, this paper examines the gen-
eral pattern of U.S. executive pay using the pop-
ulation of firms in the ExecuComp data set.20
Total CEO compensation is measured as salary,
bonus, long-term incentive payouts, the value of
stock options granted during the year (valued on
the date of the grant using the Black-Scholes
method), and other cash payments (including
signing bonuses, benefits, tax reimbursements, and
above-market earnings on restricted stocks). This
is a “flow” measure of executive pay, capturing
compensation received by the executive in a given
9. year. It is consistent with other executive pay
research.21 However, it is different from CEO
wealth, which would include not only the value of
stock and options granted during a given period,
but the value of previosuly granted options and
other equity as well. The importance of CEO firm
wealth in providing incentives is discussed below.
Figure 1 plots the CEO pay distribution of
ExecuComp firms in 2003.22 Average annual re-
muneration is approximately $4.5 million, with a
median of $2.5 million. The distribution has two
important characteristics: considerable pay disper-
sion and a positive skew (hence the long right
tail). This means that most CEOs earn relatively
low compensation, and a few CEOs in the right
tail receive excessively generous rewards. The no-
tion that all CEOs receive stratospheric sums is
incorrect. It is possible to show the same effect in
S&P 500 firms. Average annual remuneration for
CEOs in the S&P 500 firms was $9 million, with
a median of $6.7 million in 2003. Total compen-
sation in S&P 500 firms is, of course, much higher
than firms in the entire ExecuComp dataset. This
reflects the well-known positive correlation be-
tween CEO pay and firm size. Larger firms require
2006 27Conyon
managers who are more talented, and therefore
they award greater compensation.23
Table 1 shows the total pay and the compo-
nents of total compensation of CEOs and other
10. non-CEO top executives between 1993 and 2003.
Over the ten-year period, both CEO and non-
CEO executive pay increased. In 2003, the me-
dian pay for CEOs was $2.5 million, compared
with $1.3 million in 1993, a growth rate of 7.1
percent per year. However, the means for these
years are $4.5 million and $2.0 million, respec-
tively, exhibiting the positive skew discussed ear-
lier. Overall, non-CEO executives earn approxi-
mately 40 percent of the CEO’s compensation.
Since 1993, the percentage of option pay has
increased, while the percentage of salary pay has
decreased. Since 2001, restricted stock pay has
become a more important component of CEO pay
and options have become slightly less important.
Across all years, however, non-CEO executives
receive a larger amount of their compensation
from salary than CEOs do, while CEOs receive a
larger amount of their compensation from options.
In summary, the total pay growth rate for CEOs
and other executives is about 7.0 percent annu-
ally. Over time, salaries have become less impor-
tant as a fraction of total pay, the annual bonus
fraction has remained constant (approximately 20
percent), and stock options and restricted stock as
a fraction of pay have increased.
Table 2 shows the dollar value of the main
components of CEO (top panel) and non-CEO
(bottom panel) executives’ total compensation,
including base salary, options granted (using the
Black-Scholes value method), and restricted stock
granted. The base salary of CEOs has grown 2.6
percent per year, just under the rate of inflation.
The noticeable increase in CEOs’ total compen-
sation over the ten-year period can be attributed
11. to increases in option grants and restricted stock.
These have grown by 10.6 percent and 11.0 per-
cent annually. The salary of non-CEO executives
increases slightly more, at 3.9 percent per year. For
all years, CEOs earn a salary that is twice that of
non-CEO executives. The non-CEO executives
also receive more stock options and restricted stocks,
which have grown 8.6 percent and 9.4 percent re-
spectively. The empirical evidence suggests the
growth in total pay is due to an increase in option
and restricted stock compensation rather than salary.
These findings are partially consistent with contract
theory, which emphasizes incentive pay over sala-
ries. Alternatively, the evidence seems slightly less
consistent with the managerial power theory, since
risk-averse managers would prefer cash compensa-
tion to more risky option compensation. In addition,
if managerial power were increasing over time, one
might have expected to see greater growth in salaries
than the evidence here suggests. However, Bebchuk
and Grinstein24 argue that, once one controls for
firm characteristics, both equity and non-equity pay
grew throughout this period. Since there is no sub-
stitution effect, they contend this is inconsistent
with contract theory. In summary, the evidence
from Tables 1 and 2 indicates that the total level of
CEO pay is increasing mainly due to stock option
grants.
Executive Incentives
W
e now turn to executive incentives and the
link between pay and firm performance.25
The evidence demonstrates that executive
12. compensation and the fraction of pay accounted
for by option grants increased during the 1990s.
Principal-agent theory predicts that a firm designs
contracts in order to yield optimal incentives,
therefore motivating the CEO to maximize share-
holder value. In designing the contract, the firm
Figure 1
The Distribution of CEO Compensation in S&P
Firms, 2003
Source: ExecuComp. Data plotted for variable TDC1 (total
compen-
sation) with values less than $60 million.
28 FebruaryAcademy of Management Perspectives
recognizes the CEO is risk averse. Thus, imposing
greater incentives requires more pay to compen-
sate the agent for increased risk. In the previous
section, the paper demonstrated that CEO pay has
increased. Next, we examine what has happened
to CEO incentives. The analysis shows that exec-
utives have considerable equity incentives that
create a strong and increasing link between CEO
wealth and firm performance. This finding seems
at odds with the notion that executive pay and
performance are decoupled.26 It is, however, con-
sistent with other economic evidence, showing
that the link between pay and performance has
been increasing in the United States.27
Executives receive incentives from several
13. sources. They receive financial incentives from
salary and bonus, as well as new grants of options
and restricted stock, which together measure flow
Table 1
Executive Compensation and its Components in the United
States 1993–2003
Year N Total Pay Total Pay
Base
Salary
Annual
Bonus
Option
Grants
Restricted
Stock Other
CEOs
Median
($thous)
Mean
($thous) (%) (%) (%) (%) (%)
1993 1153 1258.8 2045.4 43.4 20.3 22.9 4.3 9.1
1994 1541 1255.9 2151.4 41.9 20.4 26.5 3.7 7.6
1995 1596 1311.6 2279.8 41.0 20.7 25.0 4.3 9.0
1996 1641 1587.6 3145.0 36.9 20.0 29.2 4.6 9.2
1997 1664 1923.3 3828.9 33.8 20.2 32.3 4.4 9.3
1998 1724 1962.9 4494.5 33.0 18.1 35.6 4.7 8.7
1999 1799 2188.4 5224.0 31.2 18.0 38.8 4.0 8.0
2000 1782 2443.5 6694.8 30.9 17.4 38.7 4.7 8.2
14. 2001 1655 2527.0 6324.3 30.6 14.5 42.3 5.1 7.4
2002 1651 2604.8 4909.8 30.4 17.4 38.5 6.0 7.7
2003 1664 2498.6 4544.8 31.5 19.4 32.3 8.4 8.4
Annual Growth Rate (%) 7.1 8.3 �3.2 �0.5 3.5 6.9 �0.8
Non-CEO Executives
1993 7177 478.0 777.8 49.9 18.9 19.7 3.5 8.0
1994 7486 508.3 852.9 47.7 19.4 22.3 3.2 7.5
1995 7715 528.8 913.9 47.2 19.5 20.9 3.6 8.8
1996 8193 618.2 1141.2 42.9 19.0 25.9 3.9 8.3
1997 8428 690.2 1388.1 40.3 19.2 28.5 3.9 8.1
1998 8695 730.7 1511.5 39.9 17.4 30.7 4.2 7.8
1999 8428 829.1 1931.2 37.5 17.7 33.9 3.6 7.3
2000 8010 922.5 2417.7 36.4 17.3 34.8 4.2 7.3
2001 7652 937.7 2094.0 37.0 15.1 36.6 4.3 6.9
2002 7490 940.9 1841.8 37.6 17.5 32.3 5.2 7.3
2003 7137 931.7 1651.6 38.3 18.4 28.2 7.1 8.0
Annual Growth Rate (%) 6.9 7.8 �2.6 �0.3 3.7 7.3 0.0
Source: ExecuComp
This table shows the total compensation of CEO and non-CEO
executives between 1993 and 2003. Total pay is the sum of
salary, bonus,
long-term incentive payouts, total value of stock options
granted (using Black-Scholes), and other cash payments
(includes compensation
such as signing bonuses, benefits, tax reimbursements, and
above market earnings on restricted stocks). This is variable
TDC1 in the
ExecuComp data set. Base salary is the percentage of an
executive’s total compensation that is attributed to salary for a
given year; bonus,
the percentage attributed to bonus; option grants, the percentage
attributed to the value of options granted; restricted stock, the
percentage attributed to the value of restricted stock holdings
granted.
15. 2006 29Conyon
compensation. They also receive incentives from
changes in their aggregate holdings of stock and
options in the firm, as described in detail below.
Finally, the probability of termination because of
poor performance gives the CEO an incentive to
pursue strategies that maximize firm value. In this
case, if terminated, an executive suffers reputation
loss and human capital devaluation in the mana-
gerial labor market. However, this paper— consis-
tent with other recent research in financial eco-
nomics—focuses on compensation and equity
incentives, leaving aside career concerns and the
labor market for managerial talent. In other words,
it restricts attention to financial incentives.
The key to understanding financial incentives
is recognizing that they arise from the entire port-
folio of equity holdings and not simply from cur-
rent pay. Equity incentives, then, are the incen-
tives to increase the stock price arising from the
managers’ ownership of financial securities in the
Table 2
Value of Components of Executive Compensation in the United
States 1993–2003
Year
Base Salary ($thousands)
Option Grants
17. CEO and non-CEO executives’ total compensation. The main
components
include base salary, options granted (using the Black-Scholes
value), and restricted stock granted. Growth rate is the average
annual
growth over the ten-year period. Note that the median and
means were calculated for each component only if the executive
had the
component in a given year. For example, if an executive was not
granted restricted stocks in a given year, his observation was
not included
when calculating the summary statistics for restricted stocks
that year.
30 FebruaryAcademy of Management Perspectives
firm.28 For example, a CEO may receive 100,000
options this year, which might add to 400,000
options granted in previous years, for a total of
500,000 options held. If the stock price decreases,
then the value of the 100,000 options granted this
year declines— but so does the value of the op-
tions accumulated from previous years. Since the
CEO will care about the whole stock of 500,000
options, not simply this year’s 100,000, executive
compensation received in any given year provides
only a partial picture of CEO wealth and incen-
tives. To understand CEO incentives fully, it is
important to focus on the aggregate amount of
shares, restricted stock, and stock options that the
CEO owns in the firm.
The analysis begins by noting that the CEO’s
18. wealth from ownership of firm equity is the value
of the CEO’s stock and option portfolio. We cal-
culate the wealth as the value of shares and re-
stricted stock plus the Black-Scholes value of the
aggregate amount of stock options owned. Follow-
ing Core and Guay,29 executive portfolio incen-
tives are defined as the dollar change in the value
of the CEO’s stock and option portfolio arising
from a one percent change in the stock price.30
This “equity stake” measure31 defines incentives as
the dollar change in managerial wealth from a 1
percent increase in shareholder wealth and can be
written as the following: 1% � (share price) �
(the number of shares held) � 1% � (share
price) � (option delta) � (the number of options
held).32 Notice that by focusing on equity incen-
tives, we are ignoring the incentives arising from
salary and annual bonus awards. Research shows
that the correlation between salary, bonus, and
stock price performance is low, suggesting these
elements of flow compensation contribute little to
aggregate equity incentives.33
Table 3 provides preliminary estimates of
wealth and incentives34 for the set of ExecuComp
firms. It shows the value of shares owned, the
value of all options, total wealth, and equity in-
centives of CEO and non-CEO executives be-
tween 1993 and 2003. Wealth is defined as the
value of an executive’s equity portfolio. Also in-
cluded are stock owned (calculated as the number
of shares owned times the value of the stock at the
fiscal year end), value of options (calculated using
the Black-Scholes method), and restricted hold-
ings (the value of the restricted stock holdings at
19. the fiscal year end). In 2003, median CEO wealth
was approximately $22 million, whereas non-CEO
executive wealth was just under $4 million, indi-
cating that CEOs have more wealth in the firm
than other top executives. Agency theory predicts
this result: an efficient contract will allocate more
incentives to individuals who have the greatest
impact on firm value. The results are consistent
with CEOs’ critical roles in formulating and im-
plementing firm strategy and change.35 In addi-
tion to annual compensation, as shown earlier,
the wealth distribution of CEOs and non-CEO
executives is right-skewed. For instance, average
CEO wealth is about $128 million compared to
the median of $22 million. CEO and non-CEO
executive wealth had similar growth rates over the
period of 9.1 percent and 9.4 percent each year,
respectively. Additionally, the value of options
has increased significantly, with an average an-
nual growth rate around 15 percent each year for
both groups, once again illustrating the impor-
tance of options in driving changes in executive
compensation.
How does the estimate of CEO wealth change
as the stock price changes? To illustrate, consider
the incentives of the median CEO in 2003. CEO
wealth from owning firm stock and options is
approximately $22.2 million, about nine times
greater than current flow pay (from Table 1,
roughly $2.5 million). CEO incentives total ap-
proximately $287,000. If the stock price at this
CEO’s firm fell by 10 percent, his portfolio wealth
would decrease in value by $2.87 million. This
$2.87 million decline is greater than median CEO
compensation in this year ($2.5 million) indicat-
20. ing that half of CEOs would lose more than an
entire years pay. The important point to stress is
that executive wealth can decline precipitously as
the stock price falls.36 It seems that relative to
“flow” compensation, the incentives received by
CEOs in the form of stock and options are con-
siderable.
The evidence shows that CEOs have plenty of
financial incentives, arising primarily from CEO
ownership of stock and options in their firms.
Again, we would stress that such financial incen-
2006 31Conyon
tives are only one factor motivating executives.
Agents are as likely to be motivated by intrinsic
factors of the job, career concerns, social norms,
tournaments, and the like. One problem with
stock options and other forms of incentive pay is
not that they provide too few incentives, but that
they may lead to unintended consequences. It is
well known that incentives can bring about be-
havior by the agent that was unanticipated by the
principal. In a classic paper, Steven Kerr37 high-
lighted the folly of rewarding A while hoping for
B. In short, he articulated the notion that one gets
what one pays for. If one rewards activity A and
not B, then people will exert effort on A, while
de-emphasizing B. Kerr illustrates his point with
an array of examples from politics, industry, and
human resource management. In general, this is a
problem of providing appropriate incentives to
22. 1998 0.5 12.9 1.1 4.7 2.4 18.0 32.7 202.3
1999 0.5 15.1 1.3 7.6 2.7 23.3 36.7 256.7
2000 0.4 16.7 1.5 7.5 2.9 24.7 38.2 275.0
2001 0.5 14.6 1.8 5.9 3.1 21.0 41.3 238.0
2002 0.4 10.6 1.4 4.2 2.4 15.2 33.0 175.9
2003 0.6 12.4 2.1 5.6 3.7 18.5 49.8 216.5
Annual Growth Rate (%) 4.1 8.5 15.4 14.1 9.4 9.9 9.6 10.5
Source: ExecuComp
This table shows the equity, value of options, wealth, and
incentives of CEO and non-CEO executives between 1993 and
2003. It relates
to holdings in their own firm. Equity is the value of stocks
owned (calculated as the number of shares owned times the
value of the stock
at the fiscal year end). Value of options is the value of
exercised and unexercised stock options (calculated using the
Black-Scholes
equation). Wealth is the value of a CEOs portfolio, which
includes equity, options, and restricted holdings. Incentives are
defined as 1
percent change in the value of the portfolio (stocks options are
weighted by the delta of the option). The growth rate is the
growth of
components over the ten-year period.
32 FebruaryAcademy of Management Perspectives
agents engaging in multiple tasks.38 More re-
cently, Robert Gibbons has discussed the design of
incentive programs recognizing such problems.39
Another problem with incentive compensation
is that it may encourage opportunistic behavior by
23. managers, manipulation of performance measures,
or cheating. The powerful and often unantici-
pated effects of financial incentives on economic
outcomes have been documented in diverse con-
texts such as classroom teaching, real estate mar-
kets, vehicle inspection markets, and the behavior
of physicians.40 In the corporate context, David
Yermack demonstrates that CEOs opportunisti-
cally time the award of option grants around earn-
ings announcements in order to increase their
compensation.41 Other studies find that private
information is used by executives to engineer ab-
normally large option exercises and hence the
payouts from those options. In addition, studies
show that firms with more incentives are associ-
ated with greater earnings manipulation.42 Recent
studies show that the likelihood of a firm being
the target of fraud allegations is positively corre-
lated with option incentives.43 In short, options
and incentive pay may motivate managerial be-
havior that is not always anticipated or ideal.
When designing compensation plans, boards must
be aware of the unwanted as well as beneficial
effects of incentives.
Explanations for Changes in
U.S. Compensation
T
he empirical evidence suggests fundamental
shifts in compensation and incentives. Incen-
tive pay such as stock options have increased
in importance. What accounts for these changes?
The answers are complex, varied, and the subject
of contemporary research. Therefore, this section
24. simply outlines some important candidate expla-
nations, centering on agency explanations, the
managerial labor market, the board of directors,
technological shocks driving corporate strategy
and change, misperceptions about stock options,
and managerial power and rent extraction.44
The first potential explanation for changes in
compensation and incentives is due to principal-
agent theory. A standard agency model shows that
the optimal amount of incentives given to the
CEO are increasing in the (marginal) productivity
of the agent.45 If CEOs become more productive,
or labor services relatively scarce, then optimal
CEO incentives increase. Similarly, agency theory
predicts the use of more incentives if agents are
less risk-averse. If CEO risk tolerance falls over
this period, this might also contribute to increases
in incentives. Standard agency theory, however,
predicts an inverse relationship between incen-
tives and the variation in firm performance. This
relationship is the incentive-risk trade-off. How-
ever, studies often show a positive relation be-
tween incentives and firm risk (see below). In
addition, Prendergast’s46 review of the empirical
literature shows that the trade-off between incen-
tives and risk is tenuous. He develops a contract
model that reconciles the theory with the empir-
ical evidence, showing incentives are provided in
more risky environments when authority is dele-
gated to the agent. In addition, the standard
agency model predicts greater expected compen-
sation when incentives are greater. This increase
is required to compensate the CEO for the impo-
sition of greater risk and the increased effort in-
25. duced by higher incentives. Suppose that efficient
contracting requires an increase in CEO incen-
tives over time. This would lead to an increase in
risk borne by the CEO. Given that both incen-
tives and compensation increased in the 1990s,
this trend is consistent with the agency model. If
compensation had increased without an increase
in incentives, it would have indicated problems
with pay setting.47
The second potential explanation for changes
in U.S. executive compensation is related to shifts
in the managerial labor market. Changes in the
demand and supply of managerial talent can have
profound effects on executive pay. An increase in
the demand for skilled CEOs will increase com-
pensation. Himmelberg and Hubbard48 argue that
the supply of highly skilled CEOs who are capable
of running large complex firms is relatively inelas-
tic; therefore, shocks to aggregate demand in-
crease both the value of the firm as well as the
marginal value of the CEO’s labor services to the
firm. They show that, in equilibrium, such shocks
lead to greater executive compensation. Murphy
2006 33Conyon
and Zabojnik49 present a theoretical model ex-
plaining CEO pay based on changes in the relative
importance of general and specific managerial
capital. General managerial capital (such as
knowledge of finance, accounting, or manage-
ment of human capital) is valuable and transfer-
able across companies, whereas specific manage-
26. rial capital skills (such as knowledge of firm
suppliers or clients, etc.) are only valuable within
the organization. In their model, the firm decides
whether to fill a CEO vacancy by choosing an
incumbent or external candidate. A company hir-
ing externally forgoes valuable firm-specific skills
but selects from a larger set of managers allowing
better matching of managers to firms. Firms will
increasingly appoint external CEO candidates as
general managerial capital becomes increasingly
valuable relative to firm-specific managerial capi-
tal. Labor market competition for talent, espe-
cially for CEOs with general transferable skills,
then determines CEO pay. Murphy and Zabojnik
argue that general managerial skills have become
more important in the modern firm, driving up
pay. Empirically, they show external CEO hires as
a percentage of all CEO appointments increased
from 15 percent in the 1970s to 27 percent during
the 1990s. In addition, external appointments to
the CEO position receive a compensation premi-
um—and this premium has increased during the
1990s.
The third explanation for changes in U.S. ex-
ecutive compensation is the growth of more dili-
gent boards. Recently, there has been an increase
in theoretical research on boards of directors.50 In
the context of CEO, pay one might initially be-
lieve that more diligent boards would award lower
compensation, but this is only the case if pay is
excessive. Benjamin Hermalin51 provides a model
to explain trends in corporate governance. Be-
cause the percentage of outsiders on compensa-
tion committees is increasing (see the evidence in
the next section), we can conclude that boards are
27. becoming more diligent. Hermalin theorizes that
the more diligent a board is, the more likely it will
be to monitor the CEO (seek information about
his ability). This, in turn, will give the CEO
incentives (directly proportional to board dili-
gence) to work harder in equilibrium. Because of
this response, the CEO’s equilibrium utility will
have decreased; thus, he will demand more com-
pensation for this decrease. Therefore, Hermalin
develops a theory that more-diligent boards will
have CEOs who receive a greater compensation to
explain the trend in recent years of an increase in
both independent directors on compensation
committees and CEO pay.
The fourth explanation for changes in execu-
tive compensation is a shift in corporate strategy
brought about by technology and other environ-
mental shocks. As firms adapt to or change with
their environment, different compensation con-
tracts may become necessary. Dow and Raposo52
develop a contracting model demonstrating the
link between corporate strategy and CEO com-
pensation, predicting greater executive compensa-
tion in highly changeable environments. Dra-
matic corporate change has abounded in the
United States since the 1980s. Major U.S. indus-
tries were deregulated, and fundamental techno-
logical developments led to pressure for U.S. firms
to reconsider their corporate strategies and fo-
cus.53 These developments acted as important cat-
alysts behind the merger, restructuring, and take-
over waves of the 1980s and 1990s.54 For example,
the value of U.S. mergers and acquisitions as a
percentage of GDP has been increasing since the
28. 1970s.
The Dow and Raposo paper55 outlines a model
where the CEO has discretion over the firm’s
strategy, and that different strategies require dif-
ferent levels of effort. For example, a strategy for
dramatic change would require more effort than
maintaining the status quo. To extract a greater
surplus from shareholders, CEOs select excessively
ambitious strategies whose success depends
heavily on their own performance. Greater incen-
tives result in overly dramatic strategy choices.
Anticipating this distortion, shareholders could
commit to handing over large pay packages at the
outset. Dow and Raposo show that, in highly
changeable environments, where dramatic strate-
gic change is possible and CEOs are better in-
formed about strategy than the shareholders, such
a contract may be optimal for shareholders. The
model helps interpret the 1990s as a period of
34 FebruaryAcademy of Management Perspectives
great corporate change where firms committed to
high CEO compensation.
Inderst and Mueller56 also link strategy to com-
pensation by addressing how to induce a CEO to
reveal information to shareholders. They articu-
late that the firm should alter its corporate strat-
egy— especially if the change in strategy leads to
the dismissal of the incumbent CEO. In their
model, the firm faces a decision between “change”
and “continuation” of its current strategy, which
29. in turn depends on the firm’s business environ-
ment (the “state of nature”). In low states of
nature, the firm’s expected future profits under the
“continuation” strategy are low, meaning
“change” is optimal. In high states of nature, “con-
tinuation” is optimal. In practice, the CEO typi-
cally knows the ideal strategy before others. Be-
cause the CEO is likely to favor the continuation
strategy, even when change is optimal, the trick is
to get the CEO to reveal private information.
Inderst and Mueller derive an optimal contract
that consists of options, a base wage, and sever-
ance pay. The role of severance pay is to encour-
age the CEO to reveal information that might cost
the CEO his job. When deciding between “con-
tinuation” and “change” strategies, the CEO’s
tradeoff is on-the-job pay (i.e., options) against
severance pay. The optimal on-the-job pay
scheme is one that minimizes the amount of sev-
erance pay required to select the “change” strategy
in low states of nature when change is the best
choice. Inderst and Mueller show that, as the
likelihood that change is desirable for the firm
increases, there will be increases in the size of the
option grant, as well as the severance pay. More-
over, the likelihood that change will happen also
increases. The model is therefore consistent with
major governance events of the 1990s, such as the
large increases in executive compensation, the
increased frequency of forced CEO turnovers, and
dramatic corporate change.
Other research has also argued that incentives
and firm growth opportunities are positively re-
lated. Smith and Watts57 argue that the existence
and prevalence of growth opportunities (or the
30. firm’s investment opportunity set) make it diffi-
cult for owners to know the correct value maxi-
mizing strategies. In addition, they are uncertain
whether CEOs are selecting the right actions. The
argument suggests that monitoring technology
and equity incentives are substitute instruments
used to achieve the firms’ goals. Several studies
show that firms with growth opportunities have
greater equity incentives.58 Demsetz and Lehn59
also argue that more risky and uncertain environ-
ments require greater incentives, because share-
holder-monitoring costs increase. Rather than en-
during the greater monitoring costs to determine if
the CEO has taken the right actions, shareholders
instead use equity incentives to motivate manag-
ers. If the firms’ operating environments have
become more uncertain, or growth opportunities
more valuable, we would expect to see incentive
pay becoming more prevalent.
The fifth explanation for changes in executive
compensation is misperceptions about the cost
and value of options. Murphy60 develops the “per-
ceived cost” hypothesis to explain the growth in
executive pay. The accounting treatment of U.S.
options during the 1990s means it was effectively
“free” for boards to grant them to executives since
no cost appears in the profit and loss account. The
“perceived cost” to the board is less than the
economic cost of the option measured by its
Black-Scholes value. In addition, as we showed
earlier, a risk-averse and non-diversified employee
will value an option less than its economic cost.
According to Jensen et al.,61 this means “too many
options are granted to too many people, and op-
31. tions with favorable accounting treatment will be
preferred to better incentive plans with less favor-
able accounting treatment.”
The final explanation for the growth in exec-
utive compensation is the managerial power hy-
pothesis. Bebchuk and Fried62 develop a model
where CEOs control the pay-setting process, sug-
gesting managerial power and rent extraction are
occurring. For example, research has indeed dem-
onstrated that CEO pay is greater when boards are
weak.63 A board is weak or powerless if it is too
large, and therefore it is difficult for directors to
oppose the CEO, or if the CEO has appointed the
outside directors, who are beholden to the CEO
for their jobs. In addition, it is weak when direc-
tors serve on too many other boards, making them
too busy to be effective monitors. Finally, it is
2006 35Conyon
weak if the CEO is also chair of the board, since
conflicts of interest arise. When board governance
is poor, excess pay as an agency cost is to be
expected. However, during the 1990s boards be-
came less weak because boards increasingly added
independent directors and strengthening gover-
nance arrangements. In these circumstances, rent
extraction becomes less, not more, likely.64
Bebchuk and Fried also claim that important
features of stock option plans are inconsistent
with optimal contracting and reflect managerial
power. Simple agency models predict that the
32. market component of firm performance be re-
moved from the CEOs’ compensation package
since CEO actions do not influence the market,
incentives are not improved, and the pay contract
is riskier.65 Such market indexing is called “rela-
tive performance evaluation.” Bebchuk and Fried
argue that, since option contracts lack explicit
relative performance evaluation, executives re-
ceive windfall gains as market value increases. In
short, they are paid for observable �luck,� not their
performance or skill. The typical stock option
plan does not explicitly filter out general stock
price increases that are attributable to market or
industry trends and therefore unconnected to the
executive’s own performance. This means that, in
rising markets, the value of a CEO’s options in-
creases even if firm performance is worse than the
market.
Using indexed options would be one way to
explicitly introduce relative performance evalua-
tion into the contract66 and provide incentives at
lower cost. However, the lack of indexed options
and the near ubiquity of so-called fixed price op-
tions, where the fixed exercise price of the option
grant is usually set equal to the stock price, does
not necessarily reflect managerial power. Instead,
the accounting treatment of options in the last
decade means that indexed options would attract
an accounting charge. Thus, faced with a decision
to use a potentially superior option that would
decrease costs, versus using a standard fixed price
option, which attracts no charge, firms choose the
latter. This choice is not necessarily because of
managerial power, but because of an accounting
anomaly. However, Bebchuk and Fried argue the
33. accounting explanation for lack of relative perfor-
mance (or reduced-windfall options) is incom-
plete. In part, this is because management lobbied
against expensing options and did not exert effort
to get non-expensing for indexed options.67 In
addition, not only is explicit indexing in compen-
sation contracts rare, studies also find little evi-
dence of relative performance evaluation in the
estimated relationship between pay and perfor-
mance.68 However, this may not be due to man-
agerial power. For instance, more complicated
agency models suggest the value of a CEO’s hu-
man capital changes with market fortunes. If so,
CEO compensation also moves with the market.
Specifically, Paul Oyer69 develops a model where
it is optimal to pay the CEO for industry level
performance if that sector performance is corre-
lated with the CEOs’ outside opportunities. In
addition, recent empirical evidence shows that
this hypothesis has validity.70
The managerial power theory advanced by Beb-
chuk and Fried and Bebchuk and Grinstein also
provides a potential explanation for why pay has
changed over the recent decade. One reason for
the growth in executive pay is the increased ac-
ceptance by shareholders of equity-based compen-
sation. This enabled the compensation plan de-
signers (the board and compensation committees)
to take advantage of this willingness to provide
large payoffs to executives. They also argue that
the bull market made investors more forgiving and
weakened constraints on pay allowing it to grow.
Bebchuk and Grinstein also argue that during this
period the barriers to takeovers increased. Manag-
34. ers became more entrenched and enjoyed greater
compensation. These power explanations for the
growth in pay contrast with other economic based
explanations. A challenge for future research is to
distinguish between the competing theories to
explain the growth in executive pay.
The Governance of Executive Pay
C
ontract theory shows that pay can ameliorate
the agency problem by providing incentives
that motivate managers to optimize the long-
term value or earnings potential of the firm. How-
ever, if the CEO controls the contracting process
then, as Bebchuk and Fried have argued, compen-
sation can be part of the problem rather than the
36 FebruaryAcademy of Management Perspectives
solution. It is impossible to evaluate whether pay
outcomes are optimal without better understand-
ing the pay-setting process. In this section, we dig
a bit deeper into what boards and compensation
committees do to shed light on that relationship.
The job of the board is to hire, fire, and com-
pensate the CEO.71 When appointing the CEO,
the board can choose to offer him an explicit
employment contract or not (and, if not, the
contract is “implicit”). Gillan et al.72 and Schwab
and Thomas71 describe the characteristics of ex-
plicit employment contracts. These contracts
35. specify the CEO’s salary, bonus, and incentive
(option) package. The employment contracts typ-
ically have a fixed duration. They are not so-
called “employment-at-will” contracts, but are
typically 2-to-3 year renewable. The contracts usu-
ally contain information about termination proce-
dures, and provisions and non-compete and arbitra-
tion clauses. Schwab and Thomas73 show that
employment contracts generally do not contain re-
strictions on the CEO’s ability to hedge stock op-
tions. In addition, the employment contract con-
tains information about perquisites (such as
company car, country club membership, pension
advice, company aircraft, and spouse travel). Gil-
lan et al. show that less than half of S&P 500
CEOs have explicit contracts; the rest have “im-
plicit” contracts. They demonstrate that contract
theory explains whether the employment contract
is explicit or not. For example, the contract is more
likely to be explicit when there is greater potential
for opportunistic behavior post-contracting by the
firm, where the CEO is making large firm-specific
investments or where there are greater informa-
tion asymmetries between the parties.
We showed earlier that boards and compensa-
tion committees furnish CEOs with important
incentives via stock and options. The evidence on
explicit CEO contracts documented by Gillan et
al. and Schwab and Thomas shows that boards
consider other elements of compensation, such as
pensions and perquisites. Rajan and Wulf74 di-
rectly address whether perquisites represent man-
agerial excess. They use proprietary data on a
number of company perquisites and conclude that
firms offer perquisites in situations where they are
36. most likely to facilitate managerial productivity.
As such, perquisites are not managerial excess, but
instead form part of the complex contracting be-
tween the CEO and the board. In contrast, Yer-
mack75 focuses on the use of company planes. He
shows that when the use of aircraft is disclosed
publicly to shareholders, there is a drop in stock
prices of about one percent. The optimal provi-
sion of pension and perquisite arrangements in
firms promises to be an important topic for future
research.
Compensation Committees and Executive Pay
A
potential problem with pay arrangements
highlighted by the managerial power theory is
that compensation committees are inefficient.
This section evaluates the effectiveness of this
committee. Specifically, what incentives does the
committee face to promote shareholder interests?
Do compensation committee member incentives
align with shareholders or, as managerial power
theorists predict, with managers? Conyon and
He76 explicitly test the effectiveness of compen-
sation committees using three-tier agency theory77
and contrast it to a managerial power model. At
the heart of the three-tier agency model is the idea
that shareholders (the principal) delegate moni-
toring authority to a separate supervisor (e.g., a
compensation committee) who evaluates the
agent (e.g., CEO). Whether the supervisor will
work in the principal’s best interest, or instead
37. collude with the agent, is dependent on whether
the supervisor’s interests are more tightly related
with those of shareholders (principal) or manage-
ment (agent). The value of the three-tier agency
model is that it focuses attention on the supervi-
sor’s incentives to promote shareholder welfare.
To test the model, Conyon and He78 use data on
455 U.S. firms that went public in 1999. The
study finds support for the three-tier agency
model. The presence of significant shareholders
on the compensation committee (i.e., those with
share stakes in excess of 5 percent) is associated
with lower CEO pay and higher CEO equity in-
centives. Firms with higher paid compensation
committee members are associated with greater
CEO compensation and lower incentives. The
managerial power model receives little support.
They find no evidence that insiders or CEOs of
2006 37Conyon
other firms serving on the compensation commit-
tee raise the level of CEO pay or lower CEO
incentives.
A number of other studies have addressed the
effectiveness of compensation committees as well.
The balance of evidence suggests that the compo-
sition of the committee does not lead to severe
agency problems. Studies show that executive pay
is no greater if compensation committees contain
affiliated directors.79 Compensation committees,
though, have mixed effects on executive incen-
tives. Anderson and Bizjak80 and Vafeas81 find no
38. evidence that CEO incentives are lower when
affiliated directors are on the compensation com-
mittee. However, Newman and Mozes82 conclude
that pay for performance is more favorable to the
CEO when the compensation committee contains
insiders. In addition, Conyon and Peck83 show the
link between pay and performance is greater in
firms adopting compensation committees.
We use the Investor Responsibility Research
Center (IRRC) Directors database to further test
the efficiency of compensation committees be-
tween 1998 and 2003. The data is of annual
frequency and covers board members of the S&P
500, S&P MidCap, and S&P SmallCap firms. The
dataset includes information on the board com-
mittees to which a director belongs, board affilia-
tion, demographic characteristics, and other infor-
mation. Table 4 shows board and compensation
committee composition by year. The IRRC clas-
sifies a directorship as either “Employee,”
“Linked,” or “Independent.” A linked director is
“a director who is linked to the company through
certain relationships, and whose views may be
affected because of such links,” for example a
former employee.84 A director is “independent” if
elected by the shareholders and not affiliated with
the company. In 2003, 18 percent of directors are
employees, 13 percent are linked directors, and 69
percent are independent directors. The percent-
age of independent directors has been increasing
annually, coinciding with a decrease in the num-
ber of employees and linked affiliated directors on
the board. Boards, then, are becoming more inde-
pendent over time. The lower part of the table
39. focuses on those members of the board of directors
who are part of the compensation committee.
Compensation committees are becoming more in-
dependent over time as well. The percentage of
affiliated directors on the committee fell from 12.8
percent in 1998 to 7.7 percent in 2003, and at the
same time independence increased.
One can hypothesize that affiliated directors
Table 4
Directors in the Investor Responsibility Research Center (IRRC)
Data Set
Director Type on Board of Directors 1998 1999 2000 2001 2002
2003
Director Type � Employee (%) 22.3 21.9 21.8 21.3 19.7 18.4
Director Type � Linked/affiliated (%) 17.4 17.3 16.6 15.7 13.9
12.8
Director Type � Independent (%) 60.3 60.8 61.6 63.0 66.4 68.8
Total 17,048 17,420 16,675 16,669 13,499 13,792
Directors on the Compensation 1998 1999 2000 2001 2002 2003
Committee by Director Type
Director Type � Employee (%) 1.4 1.7 1.4 1.3 0.7 0.4
Director Type � Linked/affiliated (%) 12.8 12.8 11.9 11.5 9.4
7.7
Director Type � Independent (%) 85.8 85.6 86.7 87.2 90.0 91.9
Total number of directors on 6,238 6,375 6,088 6,165 5,085
5,188
Compensation Committee
Table 4 (upper part) shows the composition of the board of
directors for firms by year. A director is considered an
employee if he is
40. currently working for the firm, considered independent if he is
elected by shareholders, having no affiliation with the firm, and
considered
linked if he is affiliated with the company in such a way that his
views may be biased and unfavorable to shareholders — for
example, a
former employee or a person providing professional services to
the firm. Table 4 (lower part) includes only members of the
board of
directors who are part of the compensation committee (therefore
firms without a compensation committee are excluded), showing
the
percentage of each director type composing compensation
committees.
38 FebruaryAcademy of Management Perspectives
are more likely to set contracts that are more
favorable to CEOs relative to shareholders. For
example, one might predict that CEO compensa-
tion would be greater and that the CEO would
receive fewer incentives when the compensation
committee contains affiliated directors. Such em-
pirical evidence would be consistent with the
managerial power perspective. To test this we
performed some simple fixed-effects pay regres-
sions. We defined an independent binary variable
equal to one if the compensation committee con-
tains any affiliated directors and zero, otherwise.
The measure is consistent with previous re-
search.85 The regression results are contained in
Table 5. The results show that, after controlling
for firm size, performance, macroeconomic shocks,
41. and unobserved firm heterogeneity, there is no
relation between CEO pay and a compensation
committee containing affiliated directors. The co-
efficient of interest (affiliated compensation com-
mittee) is negative and insignificant in both re-
gressions, indicating no effect on total CEO
compensation or incentives. The results are con-
sistent with the findings of Anderson and Bijack86
and Daily et al.,87 who also find no relation be-
tween measures of CEO compensation and the
composition of the compensation committee. The
relation between incentives and firm size is also
interesting. We expect firm size to relate posi-
tively to dollar equity incentives. This is because
larger firms require more talented managers,88
who themselves are relatively wealthy compared
to managers in smaller firms.89 In addition, Core
and Guay90 argue that owners find it more difficult
to monitor managers in larger firms and so are
more likely to use equity incentives as a substitute
for monitoring. The results in Table 5 confirm this
prediction and are consistent with other studies
also showing a positive relation between incen-
tives and firm size.91
Conclusions
E
xecutive compensation is a controversial and
complex subject that continues to attract the
attention of the media, policymakers, and aca-
demics. Contract theory predicts that sharehold-
ers use pay to provide incentives for the CEO to
focus on maximizing long-term firm value. Since
42. CEOs have relatively low ownership of firm
shares, they might otherwise behave opportunis-
tically. An alternative theoretical perspective, the
managerial power view, is that CEOs control the
pay-setting process and set their own pay. This
theory predicts that compliant compensation
committees and boards provide CEOs with excess
pay (or compensation “rents”) and that contracts
are suboptimal from the shareholders’ perspective.
Distinguishing between these two theories is an
important challenge for future research.
This paper provides evidence on what has hap-
Table 5
Compensation Committee Structure and CEO Pay
Dependent variable � log(total compensation)
Log
(CEO compensation)
Log
(CEO incentives)
Affiliated compensation committee (�1) �0.008 �0.022
(0.031) (0.026)
Log(market value) 0.34** 0.83**
(0.029) (0.24)
Stock returns (�10�3) 1.32** 4.77**
(0.52) (0.43)
Time effects Yes Yes
Firm fixed effects Yes Yes
Observations 7024 6994
43. R2 0.74 0.90
** significant at 1%; * significant at 5%; � significant at 10%.
Table 5 summarizes the coefficients for each regression model.
The dependent variables used are log (total compensation) and
log
(aggregate CEO incentives).
2006 39Conyon
pened to CEO pay between 1993 and 2003. It
shows that total compensation increased signifi-
cantly over this period. Grants of stock options to
CEOs and executives are the main driver of CEO
pay gains. The paper also documents that CEOs
have important financial incentives. These arise
from the portfolio of firm stock and options owned
by the CEO. The important point is that, if the
stock price declines significantly, the value of the
CEOs’ assets falls. Analogously, if asset prices in-
crease, so does CEO wealth. In consequence, the
wealth of the CEO varies with the stock price
performance of the firm. An important research
challenge is to fully understand the potentially
unintended consequences of providing greater in-
centives to agents.
In practice, CEO compensation contracts are
determined by compensation committees that
may have conflicting incentives to align with the
CEO (leading to suboptimal contracts and excess
pay) or with shareholders (leading to optimal con-
tracts and appropriate pay). The analysis in this
44. paper illustrates that U.S. boards and compensa-
tion committees are becoming more independent
(measured by fewer insider directors and a greater
number of outside directors). The evidence shows
that the presence of affiliated directors on the
compensation committee (an instance where
greater managerial power is expected) does not
lead to greater CEO pay or fewer CEO incentives.
In summary, high pay itself is not evidence of
inefficient contracts but may simply reflect the
market for CEOs and the pay necessary to attract,
retain, and motivate talented individuals. Boards
of directors need to design compensation con-
tracts to align the interests of owners with man-
agers. One test of whether the corporate gover-
nance system is working appropriately, including
executive compensation arrangements, is to eval-
uate economic performance. Holmstrom and
Kaplan92 investigate the state of U.S. corporate
governance in the wake of corporate scandals.
They conclude that the U.S. economy has per-
formed well, both on an absolute basis and relative
to other countries over about two decades. Impor-
tantly, the economy has been robust even after
the scandals were revealed. This is not to deny
that improvements in governance arrangements
may be beneficial. Furnishing CEOs with appro-
priate compensation and incentives is desirable
for a healthy economy. However, ensuring that
the contracting process is not corrupted is an
important goal for corporate governance.
Acknowledgements
I would like to thank Peter Cappelli, John Core, James Dow,
45. Wayne Guay, Roman Inderst, Mark Muldoon, Lina Page,
Graham Sadler, and Steve Thompson for comments when
preparing this paper. I am especially grateful to Lucian
Bebchuk for his comments and suggestions. Finally, I would
like to thank Danielle Kuchinskas for excellent research
assistance.
Endnotes
1 Jensen, M.& Murphy, K.J. 1990. Performance pay and top
management incentives. Journal of Political Economy, 98:
225–264.
2 Bebchuk, L. & Fried, J. 2003. Executive compensation as
an agency problem. Journal of Economic Perspectives,
17(3): 71–92; Bebchuk, L. & Fried, J. 2004. Pay without
performance: The unfulfilled promise of executive compen-
sation. Harvard University Press.
3 Bebchuk, L. & Fried, J. 2004. Pay without performance: The
unfulfilled promise of executive compensation. Harvard Uni-
versity Press. See also their article, Pay without
performance: Overview of the issues. 2006. Academy
Management Perspectives, this issue.
4 See Bertrand, M. & Mullainathan, S. 2000. Agents with-
out principals. American Economic Review, 90:203–208;
Bertrand, M. & Mullainathan, S. 2001. Are CEOs re-
warded for luck? The one without principals are. Quar-
terly Journal of Economics, 116: 901–932.
5 On equity incentives see Core, J., Guay, W., & Larcker, D.
2003. Executive equity compensation and incentives: a
survey. FRBNY Economic Policy Review, April: 27-44. On
evaluating pay for performance see Core, J., Guay, W. &
Thomas, R. 2004. Is S&P 500 CEO compensation ineffi-
46. cient pay without performance? A review of Pay without
Performance: The unfulfilled promise of executive compen-
sation. Vanderbilt Law and Economics Research Paper No.
05-05; U of Penn, Inst for Law & Econ Research Paper
05-13. �http://ssrn.com/abstract�648648�.
6 For an impressive technical account of contract and in-
centive theory, see Laffont, J. & Martimort, D. 2002. The
theory of incentives: The principal-agent model. Princeton
University Press. See also Bolton, P. & Dewatripont, M.
2005. Contract Theory. MIT press. Agency theory has
been a very powerful tool for understanding the modern
firm. The theoretical foundations of executive compen-
sation contracts can traced to: Mirrlees, J. 1976. Optimal
structure of incentives and authority within an organi-
zation. Bell Journal of Economics, 7: 105–131; Holmstrom,
B. 1979. Moral hazard and observability. Bell Journal of
Economics, 10: 74 –91; Holmstrom, B. 1982. Moral haz-
ard in teams. Bell Journal of Economics, 13: 324 – 40;
40 FebruaryAcademy of Management Perspectives
Holmstrom, B. & Milgrom, P. 1987. Aggregation and
linearity in the provision of intertemporal incentives.
Econometrica, 55: 303–28.
7 Jensen, M., Murphy, K.J., & Wruck, E. 2004.
Remuneration: where we’ve been, how we got to here,
what are the problems, and how to fix them. Finance,
Harvard NOM Working Paper No. 04-28. �http://ssrn
.com/abstract�561305�.
8 Core, J., Guay, W., & Larcker, D. 2003. Executive equity
compensation and incentives: a survey. FRBNY Eco-
47. nomic Policy Review, April: 27-44.
9 Core, J., Guay, W. & Thomas, R. 2004. Is S&P 500 CEO
compensation inefficient pay without performance? A
review of Pay without performance: The unfulfilled promise
of executive compensation, Vanderbilt Law and Economics
Research Paper No. 05-05; U of Penn, Inst for Law &
Econ Research Paper 05-13. �http://ssrn.com/abstract�
648648�.
10 As in Hermalin, B. 2004. Trends in corporate gover-
nance, Journal of Finance (forthcoming).
11 Bebchuk &. Fried, 2004, supra note 2.
12 Some information on perquisites and deferred compensa-
tion is not fully disclosed (see Bebchuk & Fried, 2004).
13 Murphy, K. 1999. Executive compensation, in Ashen-
felter, O. & David Card, D. (Eds.), Handbook of labor
economics, Vol. 3. New York: Elsevier.
14 Core, J. & Guay, W. 1999. The use of equity grants to
manage optimal equity incentives. Journal of Accounting
and Economics, 28: 151–184; Murphy (1999) supra note
13; Conyon, M. & Murphy, K.J. 2000. The prince and
the pauper? CEO pay in the US and UK. Economic
Journal, 110: 640 – 671.
15 Black, F. & Scholes, M. 1973. The pricing of options and
corporate liabilities. Journal of Political Economy, 81: 637–
59.
16 Typically, stock options are granted “at the money” with
a maturity term of 10 years and vest after 3 years. Sup-
pose we define a standard option where S the share
48. price � $100; X the exercise or strike price � $100; T
the time to maturity � 10 Years; q the dividend yield �
2 1⁄2 %; r the risk free rate of interest � 7%; and � the
standard deviation of returns on the share � 25%. These
parameters correspond reasonably well to those of an
option an executive receives (Murphy (1999), supra note
13; Hall, B. 2000. What you need to know about stock
options. Harvard Business Review, March-April:
121-129). This standard option has an expected (Black-
Scholes) value of about $37.
17 See Lambert, R., Larcker, D., & Verrichia, R. 1991.
Portfolio considerations in valuing executive compensa-
tion. Journal of Accounting Research, 29: 129 –149; Hall,
B. & Murphy, K.J. 2002. Stock options for undiversified
executives. Journal of Accounting and Economics, 33:
3– 42.
18 Jensen et al., 2004, supra note 7.
19 Recent research has proposed alternative methods to
value options given to risk-averse and undiversified ex-
ecutives. These include Hall & Murphy (2002), supra
note 16; Henderson, V. 2005. The impact of the market
portfolio on the valuation, incentives, and optimality of
executive stock options. Quantitative Finance, 5: 1–13;
Ingersoll, J. 2002. The subjective and objective evalua-
tion of incentive stock options. Journal of Business, Yale
ICF Working Paper No. 02-07. �http://ssrn.com/
abstract�303940�; Cai, J. & Vijh, A. 2005. Executive
stock and option valuation in a two state-variable frame-
work. Journal of Derivatives, 12: 9-27; Kadam, A., Lakner,
P., & Srinivasan, A. 2005. Executive stock options:
value to the executive and cost to the firm. �http://
ssrn.com/abstract�353422�. Currently, however,
49. Black-Scholes remains the most popular valuation
method. For example, it is frequently used by firms when
reporting option compensation in SEC proxy filings.
20 Many studies use only S&P 500 firms. This will cause an
upward bias in the estimate of economy wide CEO pay.
This is because S&P 500 firms are larger than other
firms, and larger firms have greater executive pay. The
elasticity of executive pay to firm size is typically in the
range 30% to 40% (Murphy, 1999, supra note 13).
21 See for instance, Murphy, 1999, supra note 13. Total
compensation is variable TDC1 in ExecuComp. Note it
excludes the value of retirement benefits. Murphy argues
it is difficult or arbitrary to convert future payments to
annual pay. Strong cases for researching executive pen-
sions are made in Yermack, D. 2005. Flights of fancy:
Corporate jets, CEO perquisites, and inferior shareholder
returns. AFA 2005 Philadelphia Meetings. Journal of
Financial Economics. �http://ssrn.com/abstract�529822�;
Bebchuk, L. & Jackson. 2005. Putting executive pen-
sions on the radar screen (March). Harvard Law and
Economics Discussion Paper No. 507. http://ssrn.com/
abstract�694766. They show for the two-thirds of CEOs
with defined benefit plans, the value of the plan adds a
third to the total career compensation for the median
CEO. http://ssrn.com/abstract�694766.
22 We simply report pay information from the ExecuComp
database and do not adjust for inflation, purchasing
power etc.
23 Murphy, 1999, supra note 13.
24 Bebchuk, L. & Grinstein, Y. 2005. The growth of exec-
utive pay, NBER working paper 11443. Forthcoming in
50. Oxford Review of Economic Policy.
25 The material discussed in this section is based largely on
Core, Guay, & Larcker, 2003, supra note 8; Core, Guay,
& Thomas, 2004, supra note 9.
26 Note that Bebchuk & Fried, 2004 (note 2) do not claim
that there is complete decoupling of pay and perfor-
mance but rather less linkage between pay and perfor-
mance than firms could have easily accomplished and
than investors appreciate. Also, they recognize incen-
tives arising from equity holdings but stress that much of
the gains here come form market-wide and industry-wide
movements, as well as from short-term spikes that do not
last, and that firms could have designed equity compen-
sation in a much more cost-effective way (see chapters
11-14 of their book).
27 For example, Hall, B. & Liebman, J. 1998. Are CEOs
really paid like bureaucrats? Quarterly Journal of Econom-
ics, 113: 653– 691; Murphy, 1999; Core et al., 2004, supra
note 5.
2006 41Conyon
28 Hall & Liebman, 1998, supra note 16; Core et al., 2003,
supra note 8.
29 Core & Guay, 1999, supra note 14.
30 The literature discusses two broad incentive measures
(Core et al., 2003, note 8). Portfolio incentives are the
dollar change in CEO wealth from a percentage change
in stock price. The Jensen &Murphy (1990, supra note
51. 1) measure is the dollar change in CEO wealth from a
dollar change in firm value. It is proportional to the
fraction of firm shares owned by the CEO. For a given
firm the measures are simple transformations of each
other but they can give rise to different rank orderings in
a cross section of firms. For a discussion of the merits of
each measure, see Baker, G. & B. Hall, B. 1998. CEO
incentives and firm size. Journal of Labor Economics.
NBER Working Paper Series, No. 6868.
31 Baker & Hall, 1998, supra note 30; Core & Guay, 1999,
supra note 14.
32 The option delta (hedge ratio) is calculated as the deriv-
ative of Black-Scholes call option value with respect to
the share price. In this context the option delta can be
thought of as a weight, which varies between 0 and 1,
reflecting the likelihood that the stock option will end
up in the money.
33 Murphy, 1999, supra note 13.
34 In calculating portfolio wealth and incentives, we need to
make estimates of the exercise price and maturity term
for previously granted options. We use the algorithm
described by Core & Guay (1999, appendix A, supra
note 14) to arrive at the Black-Scholes value of the
portfolio of options.
35 See Dow, J. & C. Raposo, C. 2003. CEO compensation,
change, and corporate strategy. Journal of Finance (forth-
coming).
36 See Hall & Liebman, 1998, supra note 16.
37 See Kerr, S., 1975. The folly of rewarding A while hoping
52. for B., Academy Management Journal, 18: 769 –783.
38 See Holmstrom, B. & Milgrom, P. 1991. Multitask prin-
cipal-agent analyses: Incentive contracts, asset owner-
ship and job design. Journal of Law, Economics and Or-
ganization 7: 24 –52.
39 See Gibbons, R. 2005. Incentives between firms (and
within). Management Science, 51: 2–17.
40 See Jacob, B. & S. Levitt, S. 2003. Rotten apples: An
investigation of the prevalence and predictors of teacher
cheating, The Quarterly Journal of Economics, 843– 877;
Levitt, S. & C. Syverson, C. 2005. Market distortions
when agents are better informed: The value of informa-
tion in real estate, NBER working paper 11053; Hubbard,
T. 1998. An empirical examination of moral hazard in
the vehicle inspection market, Rand Journal of Econom-
ics, 29: 406 –26; Gruber, J. & Owings. M. 1996. Physi-
cian financial incentives and caesarian section delivery,
Rand Journal of Economics, 27: 99 –123.
41 Yermack, D. 1997. Good timing: CEO stock option
awards and company news announcements, Journal of
Finance, 52: 449 – 476. See also, Aboody, D. & Kasznik,
R. 2000. CEO stock option awards and the timing of
voluntary disclosures, Journal of Accounting and Econom-
ics, 29: 73–100.
42 See Bartov, E. & Mohhanram, P. 2004. Private informa-
tion, earnings manipulations and executive stock option
exercises, The Accounting Review, 79: 889 –920. Berg-
stresser, D. & Philippon, T. 2005. CEO Incentives and
Earnings Management. Journal of Financial Economics,
Forthcoming (see http://ssrn.com/abstract�640585) A
classic article on the relation between inventive pay and
53. accounting outcomes is Paul Healy 1985. The effect of
bonus schemes on accounting decisions, Journal of Ac-
counting and Economics, 7: 85–107.
43See Denis, D., Hanouna, P., & Sarin, A. 2005. Is there a
dark side to incentive compensation, Journal of Corporate
Finance, forthcoming.
44 Bebchuk A& Grinstein also review alternative explana-
tions for the growth in CEO pay albeit from the mana-
gerial power perspective. See Bebchuk, 2005, supra note
24.
45 An often-used agency model involves the principal offer-
ing the agent a linear contract (Holmstrom & Milgrom,
1987, supra note 6). The first order condition for optimal
incentives (b) is: b*�P’(e)/[1 � r � �2 � c”(e)], where
P’(e) is the CEO’s marginal productivity of effort, r is
agent risk aversion, �2 is variance in performance (risk)
and c”(e) measures how incentives respond to the cost of
effort. Incentives are lower for more risk-averse execu-
tives (�b/�r � 0), and when there is more uncontrollable
noise in firm value (�b/��2 � 0). Expected CEO com-
pensation is E[w] � s � bE[q], where “s” is a fixed salary,
“b” is incentives, and “q” is firm value.
46 Prendergast, C. 2002. The tenuous trade-off between risk
and incentives. Journal of Political Economy, 110: 1071–
1102.
47 This issue is further explored by Conyon, M., Core, J., &
Guay, W. 2005. How high is US CEO pay? A compar-
ison with UK CEO pay, University of Pennsylvania work-
ing paper.
48 Himmelberg, C. & Hubbard, R. 2000. Incentive pay and
54. the market for CEOs: An analysis of pay-for-performance
sensitivity (June 2000). Presented at Tuck-JFE Contem-
porary Corporate Governance Conference. �http://ssrn
.com/abstract�236089�.
49 Murphy, K. & Zabojnik, J. 2003. Managerial capital and
the market for CEOs. Marshall School of Business
(working paper).
50 For example, see Hermalin, B. 2004. Trends in corporate
governance, Journal of Finance (forthcoming); Harris, M.
& Raviv, A. 2005 A theory of board control and size,
University of Chicago working paper; Singh, R. 2005.
Board independence and the design of executive com-
pensation, EFA 2005 Moscow Meetings Paper. http://ssrn.
com/abstract�673741; Hermalin, B. & Weisbach, M.
1998. Endogenously chosen boards of directors and their
monitoring of the CEO, American Economic Review, 88:
96 –118.
51 Hermalin, B. 2004. Trends in corporate governance, Jour-
nal of Finance (forthcoming).
52 Dow & Raposo, 2003, supra note 35.
53 Jensen, M. 1993. The modern industrial revolution, exit
and the failure of internal control systems. Journal of
Finance, 48: 831– 830.
42 FebruaryAcademy of Management Perspectives
54 Holmstrom, B. & Kaplan, S. 2001. Corporate governance
and merger activity in the United States: Making sense
of the 1980s and 1990s. Journal of Economic Perspectives,
55. 15(2): 121–144.
55 Dow & Raposo, 2003, supra note 35.
56 Inderst, R. & Mueller, H. 2005. Keeping the board in the
dark. CEO compensation and entrenchment. London
School of Economics (working paper).
57 Smith, C. & Watts, R. 1992. The investment opportunity
set and corporate financing, dividend and compensation
policies. Journal of Financial Economics, 32: 263–292.
58 Core et al., 2003, supra note 8.
59 Demsetz, H. & Lehn, K. 1985. The structure of corporate
ownership: causes and consequences. Journal of Political
Economy, 93: 1155–1177.
60 Murphy, K. 2002. Explaining executive compensation:
managerial power versus the perceived cost of stock
options. University of Chicago Law Review, 69: 847– 869.
61 Jensen et al., 2004, supra note 7.
62 Bebchuk & Fried, 2003; 2004, supra note 2.
63 Core, J., Holthausen, R., & Larcker, D.. 1999. Corporate
governance, chief executive officer compensation and
firm performance. Journal of Financial Economics, 51:
371– 406.
64 Bebchuk & Fried (2004, supra note 2) and Bebchuk &
Grinstein (2005, supra note 24) contend that even if
boards have become more independent in this period,
firms have also become more insulated from takeover
threats, insulating boards from shareholders and leading
to increased managerial power.
56. 65 See Holmstrom 1979, supra note 6.
66 Rapapport, A. 1999. New thinking on how to link exec-
utive pay with performance. Harvard Business Review, 77:
91–101.
67 Firms are now expensing options due to changes in ac-
counting rules. It remains to be seen whether alterative
types of options are used in the future.
68 See for instance Gibbons, R. & Murphy, K. 1990. Rela-
tive performance evaluation for chief executive officers,
Industrial and Labor Relations Review, 43:S30 –S51; Ber-
trand, M. & Mullainathan, S. 2001. Are CEOs rewarded
for luck? The ones without principals are. Quarterly
Journal of Economics, 116: 901–932; Garvey, G. & Mil-
bourn, T. 2003. Incentive compensation when execu-
tives can hedge the market: Evidence of relative perfor-
mance evaluation in the cross section, Journal of Finance,
58:1557–1581.
69 See Oyer, P. 2004. Why do firms use incentives that have
no incentive effects? The Journal of Finance, 59: 1619 –
1650.
70 See Rajgopal, S., Shevlin, T., & Zamora, V. 2005. CEOs’
outside employment opportunities and the lack of rela-
tive performance evaluation in compensation contracts.
Journal of Finance, (forthcoming).
71 Jensen, 1993, supra note 53.
72 Gillan, S., Hartzell, J., & Parrino, R.. 2005. Explicit vs.
Implicit Contracts: Evidence from CEO Employment
Agreements. �http://ssrn.com/abstract�687152�.
57. 73 Schwab, S. & Thomas, R. 2004. What do CEOs bargain
for? An empirical study of key legal components of CEO
employment contracts. Cornell Law School Research
Paper No. 04-024; Vanderbilt Law and Economics Re-
search Paper No. 04-12. �http://ssrn.com/abstract�
529923�.
74 Rajan, R. G. & Wulf, J. 2004. Are perks purely manage-
rial excess? NBER Working Paper No.W10494. �http://
ssrn.com/abstract�546291� (forthcoming Journal of Fi-
nancial Economics).
75 Yermack, D. 2005. Flights of fancy: Corporate jets, CEO
perquisites, and inferior shareholder returns. AFA 2005
Philadelphia Meetings. (forthcoming Journal of Finan-
cial Economics). �http://ssrn.com/abstract�529822�.
76 Conyon, M. & He, L. 2004. Compensation committees
and CEO compensation incentives in US entrepreneur-
ial firms. Journal of Management Accounting Research, 16:
35–56.
77 Antle, R. 1982. The auditor as an economic agent. Jour-
nal of Accounting Research, 20: 503–527; Tirole, J. 1986.
Hierarchies and bureaucracies: on the role of collusions
in organizations. Journal of Law, Economics, and Organi-
zation, 2:181–214.
78 Conyon & He, 2004, supra note 76.
79 Daily, C., Johnson, M., Ellstrand, J., & Dalton, D. 1998.
Compensation committee composition as a determinant
of CEO compensation. Academy of Management Journal,
41: 209 –220; Newman, H. & Mozes, H. 1999. Does the
58. composition of the compensation committee influence
CEO compensation practices? Financial Management, 28:
41–53; Vafeas, N. 2003. Further evidence on compensa-
tion committee composition as a determinant of CEO
compensation. Financial Management, 32: 53–70; Ander-
son, R. & Bizjak, J. 2003. An empirical examination of
the role of the CEO and the compensation committee in
structuring executive pay. Journal of Banking and Finance,
27 (7): 1323–1348.
80 Anderson Bizjak, 2003 supra note 79.
81 Vafeas, 2003, supra note 79.
82 Newman & Mozes, 1999, supra note 79.
83 Conyon, M. & Peck, S. 1998. Board control, remunera-
tion committees, and top management compensation.
Academy of Management Journal, 41:146 –157.
84 The IRRC data defines an affiliated director as follows.
The director may be a former employee who previously
worked either for the firm of interest or for a majority-
owned subsidiary. A director may provide services, such
as legal or financial, have been provided by the director
personally or by his employer. The director may be a
designated director who is a significant shareholder or a
“documented agreement by a group,” for example, a
union. A director may be a customer or supplier and is
affiliated unless the transaction was deemed “not mate-
rial” in the firm’s proxy materials. A director may be
interlocked defined as a situation in which two firms
each have a director who sits on the board of the other.
A director may be a family member of an executive
officer. In practice, former employees and providing pro-
fessional services are the leading source of “affiliation”.
85 For example, Anderson & Bizjak, 2003, supra note 79;
59. Daily et al., 1998.
86 Anderson & Bijack, 2003, supra note 79.
2006 43Conyon
87 Daily et al., 1998, supra note 79.
88 Smith & Watts, 1992, supra note 57.
89 Baker, G. & Hall, B. 1998. CEO incentives and firm size.
Journal of Labor Economics. NBER Working Paper Series,
No. 6868.
90 Core, J. & Guay, W. 1999. The use of equity grants to
manage optimal equity incentives. Journal of Accounting
and Economics, 28: 151–184.
91 See Core et al., 2003, supra note 8. In contrast, Schaefer
argues that incentives measured as a fraction of common
shares owned are negatively correlated with firm size
because the value of providing incentives for effort does
not increase with size as fast as the cost of risk bearing by
the executive. See Schaefer, S. 1998. The dependence of
pay-performance sensitivity on the size of the firm, Re-
view of Economics and Statistics, 80: 436 – 443.
92 Holmstrom, B. & Kaplan, S. 2003. The state of S&P 500
corporate governance: What’s right and what’s wrong?
European Corporate Governance Institute Finance
Working Paper No. 23/2003.
44 FebruaryAcademy of Management Perspectives
60. Scanned with CamScanner
Wednesday, May 30, 2018
John Q. Hammons Center
Rogers, Arkansas
Notice of
2018 Annual
Shareholders'
Meeting
Q
OUR BELIEFS
We value every associate, own the
work we do, and communicate by
listening and sharing ideas.
We act with the highest level of integrity
by being honest, fair and objective, while
operating in compliance with all laws and
our policies.
61. We work as a team and model
positive examples while we innovate
and improve every day.
We’re here to serve customers,
support each other, and give to
our local communities.
Since Sam Walton founded our company, it always
has been a values-based, ethically led organization. Our beliefs
and values guide our decisions and our leadership.
RESPECT for
the Individual
Act with
INTEGRITY
SERVICE
to our Customers
Striving for
EXCELLENCE
Q
Letter to Shareholders • Walmart | 2018 Proxy Statement 3
From Our Lead Independent Director
As Walmart continues its transformation to better serve our
62. customers seamlessly, we are committed to continuously
enhancing our Board governance to align with our strategy.
We’ve brought fresh and diverse perspectives to the Board by
recruiting new independent directors with strong backgrounds
in technology, eCommerce, and finance and accounting. We’ve
also engaged a third-party consulting firm to help us further
develop our long-term Board succession plan and a pipeline of
future director candidates. And we recently amended our bylaws
to adopt a proxy access provision.
Our Compensation and Management Development Committee
is committed to ensuring that our compensation program
continues to support the transformation of our business.
To this end, we made important changes to our executive
compensation program, which you can read about in the CD&A
beginning on page 39. These changes were informed by our
ongoing and extensive engagement with our institutional
shareholders, whose views are always important to us. This past
year, we engaged with shareholders representing approximately
450 million shares to hear their perspectives on our strategy,
governance, compensation, and other topics.
After 12 years of service, I will now be retiring from the Board
at
our upcoming 2018 Annual Shareholders’ Meeting in
accordance
with our term limits. It has been a privilege to serve this great
company and you, our shareholders. I am confident that I leave
your company in great hands to win the future of retail.
Sincerely,
Dr. James I. Cash, Jr.
Lead Independent Director
From Our Chairman
63. In fiscal 2018, we continued to accelerate our transformation,
guided by four key objectives:
| Make every day easier for busy families;
| Change how we work;
| Deliver results and operate with discipline; and
| Be the most trusted retailer.
We made significant progress on all four fronts this past
year. We’re continuing to accelerate innovation and leverage
technology to save our customers both money and time. We’ve
continued to invest in our associates’ pay, benefits, tools, and
training, which results in a better experience for our customers.
We’ve lowered prices and reduced inventory in stores. And we
are engaging in the communities we serve to create shared
value. Your Board continues to play a key role in overseeing
our
ongoing transformation.
We are committed to thoughtful Board succession planning,
and have added six new directors in the past five years. This
refreshment has resulted in a Board with a broad mix of skills
and
diversity in backgrounds and perspectives. I firmly believe that
your Board is a strategic asset for Walmart, and I’m excited
about
the future.
Thank you for your investment in Walmart and your continued
support. I look forward to seeing many of you at our Annual
Shareholders’ Meeting or our celebration for Associates and
Shareholders. Regardless of whether you are able to attend our
64. Annual Shareholders’ Meeting in person, your vote is important
and I encourage you to vote as described on page 96.
Sincerely,
Gregory B. Penner
Chairman
Dear Fellow Shareholders:
We are pleased to invite you to attend Walmart’s 2018 Annual
Shareholders’ Meeting on May 30, 2018 at 10:00 a.m. Central
Time,
and to our Associates/Shareholders Celebration Event on June
1, 2018 at 8:00 a.m. Central Time. If you plan to attend either
or both
of these events, please see pages 95-96 for admission
requirements. For those unable to join in person, both events
will be webcast
at http://stock.walmart.com.
Q
4 Walmart | 2018 Proxy Statement
Board
Recommendation
Reference
Page
1. To elect as directors the 11 nominees identified in this proxy
statement; FOR 10
2. To vote on a non-binding, advisory resolution to approve the
65. compensation of Walmart’s named
executive officers;
FOR 38
3. To ratify the appointment of Ernst & Young LLP as the
company’s independent accountants for the
fiscal year ending January 31, 2019;
FOR 82
4. To vote on the 2 shareholder proposals described in the
accompanying proxy statement, if
properly presented at the meeting; and
AGAINST each
Shareholder Proposal
87
5. To transact any other business properly brought before the
2018 Annual Shareholders’ Meeting. 101
How to Attend the Meeting
2018 Annual Shareholders’ Meeting
If you plan to attend the 2018 Annual
Shareholders’ Meeting in person, please see
pages 95-96 for admission requirements.
2018 Associate/Shareholder Celebration
If you plan to attend the 2018 Associate/
Shareholder Celebration, please see
pages 95-96 for admission requirements.
66. The record date for the meeting is April 6, 2018.
This means that you are entitled to receive
notice of the meeting and vote your Shares at
the meeting if you were a shareholder of record
as of the close of business on April 6, 2018.
April 20, 2018
By Order of the Board of Directors,
The proxy statement and our Annual Report to Shareholders for
the fiscal year ended January 31, 2018, are available in the
“Investors” section of our corporate website at
http://stock.walmart.com/annual-reports.
Wednesday, May 30, 2018
10:00 a.m., Central Time
John Q. Hammons Center
3303 S. Pinnacle Hills Parkway
Rogers, Arkansas 72758
Friday, June 1, 2018
8:00 a.m., Central Time
Bud Walton Arena
University of Arkansas Campus
Fayetteville, Arkansas 72701
Annual Shareholders’
Meeting
Associate/Shareholder
Celebration
67. Rachel Brand
Executive Vice President, Global Governance
and Corporate Secretary
Items of Business
Notice of 2018 Annual
Shareholders' Meeting
INTERNET
www.proxyvote.com
MOBILE DEVICE
Scan the QR code on your
proxy card, notice of internet
availability of proxy materials,
or voting instruction form
CALL
1-800-690-6903
MAIL
Mail your signed proxy card or
voting instruction form
IN PERSON
Wednesday, May 30, 2018
10:00 a.m., Central Time
John Q. Hammons Center
3303 S. Pinnacle Hills Parkway
Rogers, AR 72758
(PAGE 96)How To Cast Your Vote
Q
68. Walmart | 2018 Proxy Statement 5
Table of Contents
Chairman and Lead Independent Director Letters 3
Notice of 2018 Annual Shareholders’ Meeting 4
Proxy Summary 6
Proposal No. 1: Election of Directors 10
Director Skills Criteria and Qualifications 10
Director Nominees for 2018 13
Corporate Governance 20
Board Leadership Structure 21
Board Committees 22
Communicating with the Board 25
Board Evaluations and Board Effectiveness 26
Board Refreshment and Succession Planning 26
Director Onboarding and Engagement 27
Management Development and Succession Planning 28
The Board’s Role in Risk Oversight 28
Board Oversight of Legislative Affairs, Public Policy
Engagement, Charitable Giving, and Sustainability 29
69. Shareholder Outreach and Engagement 29
How We Determine Director Independence 30
Related Person Transaction Review Policy 32
Fiscal 2018 Review of Related Person Transactions 33
Director Compensation 35
Proposal No. 2: Advisory Vote to Approve Named
Executive Officer Compensation 38
Executive Compensation 39
Compensation Discussion and Analysis
(See Separate Table of Contents) 39
Compensation Committee Report 64
Risk Considerations in Our Compensation Program 65
Compensation Committee Interlocks and Insider Participation
65
Executive Compensation Tables 66
Summary Compensation 66
Fiscal 2018 Grants of Plan-Based Awards 69
Outstanding Equity Awards at Fiscal 2018 Year-End 71
Fiscal 2018 Option Exercises and Stock Vested 72
Fiscal 2018 Nonqualified Deferred Compensation 73
70. Walmart’s Deferred Compensation Plans 75
Potential Payments Upon Termination or Change in Control 76
CEO Pay Ratio 78
Equity Compensation Plan Information 79
Stock Ownership 80
Holdings of Major Shareholders 80
Holdings of Officers and Directors 81
Section 16(a) Beneficial Ownership Reporting Compliance 81
Proposal No. 3: Ratification of Independent
Accountants 82
Audit Committee Report 84
Audit Committee Pre-Approval Policy 86
Shareholder Proposals 87
Proposal No. 4: Request to Adopt an Independent
Chair Policy 88
Proposal No. 5: Request for Report on Racial or
Ethnic Pay Gaps 91
Annual Meeting Information 94
Questions and Answers About 2018 Annual Shareholders’
Meeting and Associate/Shareholder Celebration 94
Voting 96
Proxy Materials 99
71. Shareholder Submissions for the
2019 Annual Shareholders’ Meeting 101
Other Matters 101
Table of Abbreviations 102
Annex A Non-GAAP Financial Measures A-1
Directions for 2018 Annual Shareholders’
Meeting and Associate/Shareholder
Celebration Inside Back Cover
Q
6 Walmart | 2018 Proxy Statement • Proxy Summary
Items of Business
Board
Recommendation Ref. Pages
1. To elect as directors the 11 nominees identified in this proxy
statement; FOR 10
2. To vote on a non-binding, advisory resolution to approve the
compensation of
Walmart’s named executive officers;
FOR 38
3. To ratify the appointment of Ernst & Young LLP as the
company’s independent
accountants for the fiscal year ending January 31, 2019; and
72. FOR 82
4. To vote on the 2 shareholder proposals described in the
accompanying proxy
statement, if properly presented at the meeting.
AGAINST each
Shareholder Proposal
87
In addition, shareholders may be asked to consider and vote on
any other business properly brought before the meeting.
Wednesday, May 30, 2018
10:00 a.m., Central Time
John Q. Hammons Center
3303 S. Pinnacle Hills Parkway
Rogers, Arkansas 72758
Annual Shareholders’ Meeting
You have received these proxy materials because the Board is
soliciting your proxy to vote your Shares at the 2018 Annual
Shareholders’
Meeting. This summary highlights information contained
elsewhere in this proxy statement. This summary does not
contain all of the
information that you should consider, and you should read the
entire proxy statement carefully before voting. Page references
(“XX”) are
supplied to help you find further information in this proxy
statement. Please refer to the Table of Abbreviations on page
102 for the meaning
73. of certain terms used in this summary and the rest of this proxy
statement. This proxy statement and the related proxy materials
were first
released to shareholders and made available on the internet on
April 20, 2018.
If you are unable to attend in person, you can view a live
webcast of the 2018 Annual Shareholders’ Meeting at
http://stock.walmart.com.
Proxy Summary
Q
Proxy Summary • Walmart | 2018 Proxy Statement 7
Highly Engaged Board
| Actively involved in Walmart’s strategy
| 97% overall attendance rate at Board and committee meetings
| 28 committee meetings during fiscal 2018
Thoughtful Board Refreshment
| 12-year term limit for Independent Directors
| 6 new Directors in the last 5 years
| Restructured Board committees to promote effectiveness
| Ongoing Board succession planning
74. 6
11
5
4
5
3
6
10board nominees have global or international business
experience have senior leadership experience
have marketing
or brand
management
experience
have
technology or
eCommerce
experience
have retail
experience
new directors
in 5 years
have finance,
accounting
or financial
reporting
experience
75. have
regulatory,
legal, or risk
management
experience
Skills and Experience
Board Nominee Overview
Our Board nominees bring a variety of backgrounds,
qualifications, skills and experiences that contribute to a well-
rounded Board uniquely
positioned to effectively guide our strategy and oversee our
operations in a rapidly evolving retail industry.
+10 YEARS7-10 YEARS0-3 YEARS
3 of our nominees
are female
7 of 11 nominees
are independent
4-6 YEARS
BOARD NOMINEE TENURE
Board Nominee Tenure
Median: 4.6 years
Board Nominee Tenure
Average: 7.4 years
Board Nominee Age
Median: 51 years
76. Board Nominee Age
Average: 53 years
BOARD NOMINEE AGE
4
4
2
1
0-3 years
4-6 years
7-10 years
+10 years
< 50
50-59
60-69
70-75
4
1
4
2
Q
77. 8 Walmart | 2018 Proxy Statement • Proxy Summary
Key Committee Membership
Name/Age Experience
Director
Since Principal Occupation In
d
ep
en
d
en
t
O
th
er
P
u
b
ic
C
o
82. Tim Flynn
(61)
y Senior Leadership
y Global/International
y Finance/Accounting
y Regulatory/Legal
Sarah Friar
(45)
y Senior Leadership
y Global/International
y Finance/Accounting
y Technology/eCommerce
2018
Carla Harris
(55)
y Senior Leadership
y Global/International
y Finance/Accounting
y Regulatory/Legal
2017 Vice Chairman, Wealth
Management, Managing Director
and Head of Multicultural Client
Strategy, Morgan Stanley
Tom Horton