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Author: Paul L. Joskow
Publisher:
ISBN:
Category : Administrative agencies
Languages : en
Pages : 31
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Book Description
This study explores the effect of regulatory and political constraints on the level of CEO compensation for 87 state-regulated electric utilities during 1978-1990. The results suggest that political pressures may constrain top executive pay levels in this industry. First, CEOs of firms operating in regulatory environments characterized by investment banks as relatively pro-consumer' receive lower compensation than do CEOs of firms in environments ranked as more friendly to investors. Second, CEO pay is lower for utilities with relatively high or rising rates, or a higher proportion of industrial sales, consistent with earlier research that describes political pressures on electricity rates. Finally, attributes of the commission appointment and tenure rules affect CEO compensation in ways consistent with the political constraint hypothesis: for example, pay is lower in states with elected commissioners than in states where commissioners are appointed by the governor, all else equal. Despite apparently effective pressure to constrain pay levels in this sector, however, we find no evidence of related intra-industry variation in the sensitivity of pay to firm financial performance
Author: Paul L. Joskow
Publisher:
ISBN:
Category : Administrative agencies
Languages : en
Pages : 31
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Book Description
This study explores the effect of regulatory and political constraints on the level of CEO compensation for 87 state-regulated electric utilities during 1978-1990. The results suggest that political pressures may constrain top executive pay levels in this industry. First, CEOs of firms operating in regulatory environments characterized by investment banks as relatively pro-consumer' receive lower compensation than do CEOs of firms in environments ranked as more friendly to investors. Second, CEO pay is lower for utilities with relatively high or rising rates, or a higher proportion of industrial sales, consistent with earlier research that describes political pressures on electricity rates. Finally, attributes of the commission appointment and tenure rules affect CEO compensation in ways consistent with the political constraint hypothesis: for example, pay is lower in states with elected commissioners than in states where commissioners are appointed by the governor, all else equal. Despite apparently effective pressure to constrain pay levels in this sector, however, we find no evidence of related intra-industry variation in the sensitivity of pay to firm financial performance
Author: Paul L. Joskow
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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Book Description
This study explores the effect of regulatory and political constraints on the level of CEO compensation for 87 state-regulated electric utilities during 1978-1990. The results suggest that political pressures may constrain top executive pay levels in this industry. First, CEOs of firms operating in regulatory environments characterized by investment banks as relatively `pro-consumer' receive lower compensation than do CEOs of firms in environments ranked as more friendly to investors. Second, CEO pay is lower for utilities with relatively high or rising rates, or a higher proportion of industrial sales, consistent with earlier research that describes political pressures on electricity rates. Finally, attributes of the commission appointment and tenure rules affect CEO compensation in ways consistent with the political constraint hypothesis: for example, pay is lower in states with elected commissioners than in states where commissioners are appointed by the governor, all else equal. Despite apparently effective pressure to constrain pay levels in this sector, however, we find no evidence of related intra-industry variation in the sensitivity of pay to firm financial performance.
Author: Paul L. Joskow
Publisher:
ISBN:
Category :
Languages : en
Pages : 67
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Book Description
This paper explores the influence of economic regulation on the level and structure of executive compensation. We find substantial and persistent differences in CEO compensation between firms subject to economic regulation and those in unregulated industries. CEOs of regulated firms are paid substantially less, on average, than their counterparts in the unregulated sector. In particular, in the electric utility industry, the sector which is most tightly regulated and for which we have the most data, CEOs average only 30% to 50% of the compensation earned by the CEO of a comparable firm in the unregulated sector. Compensation in the regulated sector tends to be more heavily weighted toward salary and cash and away from incentive-based forms of pay (such as stock options), and tends to be less responsive to variations in firm financial performance. The pattern of compensation discounts across industries, over time, and between firms in the electric utility industry is broadly consistent with the presence of binding political constraints on executive pay, as medicated through the regulatory process.
Author: Lucian A. Bebchuk
Publisher: Harvard University Press
ISBN: 9780674020634
Category : Business & Economics
Languages : en
Pages : 308
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Book Description
The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.
Author: Steven Balsam
Publisher: Academic Press
ISBN: 9780120771264
Category : Business & Economics
Languages : en
Pages : 410
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Book Description
General readers have no idea why people should care about what executives are paid and why they are paid the way they are. That's the reason that The Wall Street Journal, Fortune, Forbes, and other popular and practitioner publications have regular coverage on them. This book not only proposes a reason - executives need incentives in order to maximize firm value (economists call this agency theory) - it also describes the nature and design of executive compensation practices. Those incentives can take the form of benefits (salary, stock options), or prerquisites (reflecting the status of the executive within the organizational culture.
Author: Nancy L. Rose
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This study explores corporate responses to 1993 legislation, implemented as section 162(m) of the Internal Revenue Code, that capped the corporate tax deductibility of top management compensation at $1 million per executive unless it qualified as substantially "performance-based." We detail the provisions of this regulation, describe its possible effects, and test its impact on U.S. CEO compensation during the 1990s. Data on nearly 1400 publicly-traded U.S. corporations are used to explore the determinants of section 162(m) compensation plan qualification and the effect of section 162(m) on CEO pay. Our analysis suggests that section 162(m) may have created a "focal point" for salary compensation, leading some salary compression close to the deductibility cap. There is weak evidence that compensation plan qualification is associated with higher growth rates, as would be the case if qualification relaxed some political constraints on executive pay. There is little evidence that the deductibility cap has had significant effects on overall executive compensation levels or growth rates at firms likely to be affected by the deductibility cap, however, nor is there evidence that it has increased the performance sensitivity of CEO pay at these firms. We conclude that corporate pay decisions seem to be relatively insulated from this type of blunt policy intervention.
Author: Frederick D. Lipman
Publisher: John Wiley & Sons
ISBN: 9780470283035
Category : Business & Economics
Languages : en
Pages : 336
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Book Description
Executive Compensation Best Practices demystifies the topic of executive compensation, with a hands-on guide providing comprehensive compensation guidance for all members of the board. Essential reading for board members, CEOs, and senior human resources leaders from companies of every size, this book is the most authoritative reference on executive compensation.
Author: John S. Beasley
Publisher: Edward Elgar Publishing
ISBN: 1781005109
Category : Business & Economics
Languages : en
Pages : 553
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Book Description
Research on executive compensation has exploded in recent years, and this volume of specially commissioned essays brings the reader up-to-date on all of the latest developments in the field. Leading corporate governance scholars from a range of countries set out their views on four main areas of executive compensation: the history and theory of executive compensation, the structure of executive pay, corporate governance and executive compensation, and international perspectives on executive pay. The authors analyze the two dominant theoretical approaches – managerial power theory and optimal contracting theory – and examine their impact on executive pay levels and the practices of concentrated and dispersed share ownership in corporations. The effectiveness of government regulation of executive pay and international executive pay practices in Australia, the US, Europe, China, India and Japan are also discussed. A timely study of a controversial topic, the Handbook will be an essential resource for students, scholars and practitioners of law, finance, business and accounting.
Author: Sandra L. Suarez
Publisher:
ISBN:
Category :
Languages : en
Pages : 54
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Book Description
When politicians feel popular pressure to act, but are unwilling or unable to address the root cause of the problem, they resort to symbolic policymaking. In this paper, I examine excessive executive compensation as an issue that rose to the top of the political agenda during both the Great Depression and the Great Recession. Presidential candidates, members of Congress, the media, and the public alike blamed corporate greed for the economic downturn. In both instances, however, enacted legislation stopped short of changing the way in which executive pay was determined or placing effective, enforceable limits on it. I analyze the nature of the democratic process and contend that public policy scholars need to pay more attention to the occurrence of symbolic policies. The category of symbolic policies offers a more accurate approach to understanding the politics of executive compensation in the US during the two crises and helps explain why, in spite of the recent legislative efforts, it continues to rise.
Author: Brandy Elaine Hadley
Publisher:
ISBN:
Category : Chief executive officers
Languages : en
Pages : 139
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Book Description
This dissertation analyzes the impact of two external forces on executive compensation behavior. In the first chapter, the impact of political sensitivity is investigated as an external force on government contractor executive compensation. Compensation for top executives has come into the political spotlight, especially over the last decade, with many politicians publicly supporting limits on compensation. However, the impact of political scrutiny to limit compensation is debatable. This study analyzes the effect of political scrutiny on CEO compensation using a sample of Federal contractors, which represents a group of firms where politicians yield the most power. Results suggest that Federal contractors with the most visible government contracts that make up significant portions of their revenue have lower CEO compensation, but the efficiency of this compensation structure is debatable as it leaves CEOs with weaker incentives. However, the impact of political sensitivity is muted when the firm has more bargaining power with the government. In the second chapter, the effects of external forces of mandated compensation disclosure and shareholding voting requirements on compensation behavior are examined. Given the lack of guidelines provided for Dodd-Frank mandated Pay for Performance disclosure and the increase in alternative pay definitions used in Pay for Performance discussions, this chapter analyzes the determinants of and the effects on Say on Pay support of disclosing alternative pay measures. Results suggest that firms that disclose alternative pay measures in their Pay for Performance discussions do so for different reasons. Although certain measures are characteristic of opportunistic disclosure and others are indicative of informative disclosure, effects on Say on Pay are similar yet distinct. There is often a significant positive impact of disclosing additional information related to compensation on Say on Pay approval, particularly when combating prior poor Say on Pay support. However, the positive impact on Say on Pay support is most robust when peer comparisons are shared, providing evidence of the value of reporting comparative pay.
