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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: 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: Paul L. Joskow
Publisher:
ISBN:
Category :
Languages : en
Pages :
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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 quot;proconsumerquot; 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 customers. Finally, attributes of the commission appointment and tenure rules affect CEO compensation in ways consistent with the political constraint hypothesis.
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 : 0
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Book Description
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: Kym Maree Sheehan
Publisher: Edward Elgar Publishing
ISBN: 0857938339
Category : Business & Economics
Languages : en
Pages : 255
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Book Description
ïBased on extensive interviews with those directly involved in the executive pay setting process _ executives themselves, remuneration committee members, remuneration consultants, and institutional investors _ this excellent study finally explains how, despite repeated regulation over the past twenty years in both the UK and Australia, limits on the amount executives get paid, and a clear relationship between pay and performance remain as elusive as ever. Dr. SheehanÍs study suggests that by targeting the pay setting process rather than pay itself, regulation may have contributed, albeit unintentionally, to the endless upward ratcheting of absolute levels of executive pay.Í _ John Roberts, University of Sydney, Australia ïFor those that believe executive remuneration in the UK and Australia is too high and poorly aligned with company performance, this book provides an excellent analytical framework and strong arguments in favor of greater shareholder oversight of remuneration practices and pay levels. It is well-written, carefully argued and persuasive in its treatment of the subject. I wholeheartedly recommend it.Í _ Randall S. Thomas, Vanderbilt University Law School, US In this timely book, Kym Sheehan examines the regulatory technique known as ïsay on payÍ _ where shareholders vote on executive compensation in an annual, advisory vote on the remuneration report. Using the model of the regulated remuneration cycle, and drawing upon evidence of its operation from interviews, voting data and remuneration reports from UK and Australian companies, the book demonstrates whether say on pay can operate successfully to both constrain executive greed and ensure accountability exists for company performance and decision-making. The Regulation of Executive Compensation is essential reading for corporate governance academics, remuneration consultants, company directors, regulators, pension and superannuation fund trustees and unions. Politicians and their policy advisers, lawyers, accountants and anyone concerned about the corporate governance of listed companies will find much to interest them in this detailed study.
Author: Nancy L. Rose
Publisher:
ISBN:
Category : Chief executive officers
Languages : en
Pages : 34
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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: 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: P. Garth Gartrell
Publisher: West
ISBN: 9780314933546
Category : Law
Languages : en
Pages : 391
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Book Description
Author: Kevin J. Murphy
Publisher:
ISBN:
Category :
Languages : en
Pages : 62
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Book Description
The persistent outrage over CEO pay expressed by politicians, the press, media, labor unions, and the general public (but not shareholders) have prompted the imposition of a wide range of disclosure requirements, tax policies, accounting rules, governance reforms, direct legislation, and other rules constraining executive compensation stretching back nearly a century. We analyze the regulations that have substantially damaged the efficacy of CEO pay practices, ranging from the first disclosure rules in the 1930s to the 2018 Trump tax rules. We discuss the political forces behind the regulatory interventions, and assess the continuing unintended consequences of these interventions. Our emerging conclusion is that the best way the government can fix executive compensation is to stop trying to fix it, and by undoing the damage already caused through existing regulations that have, in aggregate, imposed enormous costs on organizations, their shareholders, and social welfare.
