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Author: Hyung Tae Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
This study examines how the equity compensation of chief executive officers (CEO) and that of outside directors affect management earnings forecasts (MFs) and the relationship between these two positions in terms of compensation. Our evidence reveals that CEO (director) equity compensation is positively associated with MF likelihood, frequency, and accuracy when director (CEO) equity compensation is not high. However, an increase in director (CEO) equity compensation is not effective in improving disclosure quality when the level of CEO (director) equity compensation is already high. These results suggest that the two incentive mechanisms act as substitutes when both are intensively used in the context of MF disclosure.
Author: Hyung Tae Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
This study examines how the equity compensation of chief executive officers (CEO) and that of outside directors affect management earnings forecasts (MFs) and the relationship between these two positions in terms of compensation. Our evidence reveals that CEO (director) equity compensation is positively associated with MF likelihood, frequency, and accuracy when director (CEO) equity compensation is not high. However, an increase in director (CEO) equity compensation is not effective in improving disclosure quality when the level of CEO (director) equity compensation is already high. These results suggest that the two incentive mechanisms act as substitutes when both are intensively used in the context of MF disclosure.
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: James F. Reda
Publisher: John Wiley & Sons
ISBN: 0470233222
Category : Business & Economics
Languages : en
Pages : 561
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Book Description
NEW AND UPDATED INFORMATION ON THE LAWS AND REGULATIONS AFFECTING EXECUTIVE COMPENSATION Now in a thoroughly updated Third Edition, Compensation Committee Handbook provides a comprehensive review of the complex issues facing compensation committees in the wake of Sarbanes-Oxley. This new and updated edition addresses a full range of functional issues facing compensation committees, including organizing, planning, and best practices tips. As the responsibilities of the compensation committee continue to increase, the need for practical and comprehensive material has become even more imperative. Complete with compliance advice on the latest rules and regulations that have developed since the publication of the last edition, Compensation Committee Handbook, Third Edition provides the most up-to-date and reliable information on: * The latest regulations impacting executive compensation, including new regulations issued by the SEC, recently revised GAAP accounting rules, and the just-finalized IRS regulations impacting the taxation of stock options * The roles and responsibilities of the compensation committee, including best practice tips and techniques * Selecting and training compensation committee members * How to make compensation committees a performance driver for a company * Practical applications, including incentive compensation and equity-based compensation Compensation Committee Handbook, Third Edition will help all compensation committee members and interested professionals succeed in melding highly complex technical information and concepts with both corporate governance principles and sound business judgment.
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: Brad Feld
Publisher: John Wiley & Sons
ISBN: 1118516826
Category : Business & Economics
Languages : en
Pages : 237
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Book Description
An essential guide to understanding the dynamics of a startup's board of directors Let's face it, as founders and entrepreneurs, you have a lot on your plate—getting to your minimum viable product, developing customer interaction, hiring team members, and managing the accounts/books. Sooner or later, you have a board of directors, three to five (or even seven) Type A personalities who seek your attention and at times will tell you what to do. While you might be hesitant to form a board, establishing an objective outside group is essential for startups, especially to keep you on track, call you out when you flail, and in some cases, save you from yourself. In Startup Boards, Brad Feld—a Boulder, Colorado-based entrepreneur turned-venture capitalist—shares his experience in this area by talking about the importance of having the right board members on your team and how to manage them well. Along the way, he shares valuable insights on various aspects of the board, including how they can support you, help you understand your startup's milestones and get to them faster, and hold you accountable. Details the process of choosing board members, including interviewing many people, checking references, and remembering that there should be no fear in rejecting a wrong fit Explores the importance of running great meetings, mixing social time with business time, and much more Recommends being a board member yourself at some other organization so you see the other side of the equation Engaging and informative, Startup Boards is a practical guide to one of the most important pieces of the startup puzzle.
Author: Matthias Kiefer
Publisher: Matthias Kiefer
ISBN:
Category : Education
Languages : en
Pages : 262
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Book Description
I investigate whether equity grants increase the costs of CEO dismissal or departure (Oyer, 2004; Almazan and Suarez, 2003). I argue that costs of dismissal are increased because equity grants become exercisable upon forced departure. Equity grants can increase the costs of leaving because voluntarily departing CEOs forfeit equity compensation upon departure. I follow Rajgopal, Shevlin and Zamora (2006) in linking CEO equity compensation to a measure of labor market competition in a sample of S&P1500 companies from 1996 to 2010. I find that the intensity of labor market competition measured by a Herfindahl-Hirschman Index across industries and states affects equity grants and that the correlation is reversed in the penultimate year of forced CEO departure. This is consistent with the view that CEOs are concerned about being replaced in competitive labor markets and therefore demand more compensation that converts into severance pay. Conversely, when a dismissal is anticipated, I argue that CEOs are concerned about finding new employment and are then insured against a lack of outside opportunities. In addition, I conduct an empirical investigation of the relationship between stock options, restricted stock grants and other long-term compensation between 2001 and 2006. I argue that the Sarbanes-Oxley Act did not increase managerial accountability (see for example Cohen, Dey and Lys, 2005) and that new accounting rules did not increase accounting costs of stock options (see for example Hayes, Lemmon and Qiu, 2012). Instead, I suggest that the effective prohibition of executive loans from firms and brokers made it prohibitively costly for CEOs to exercise stock options. I find that stock options began to be replaced with other long-term compensation as early as 2004. CEOs began to accumulate vested but unexercised stock options. I do not find evidence that CEOs sold vested stock to raise funds.In the final empirical chapter, I consider whether a Herfindahl-Hirschman Index across industries and states can be interpreted as a proxy for labor market competition. Aggarwal and Samwick (1999) argue that it is product market competition that affects CEO equity grants. My results are consistent with Rajgopal, Shevlin and Zamora (2006) who do not find evidence that product market competition has any significant impact on equity grants. Instead, I find that labor market competition retains a significant and positive impact in our tests, and notably holds for the largest single product market. The principal limitations of the project were found to be the difficulty of collecting data of intended turnover and classifying it into forced and voluntary turnover. With respect to loans to executives, loans by brokers are usually not disclosed. This study is the first to analyze equity compensation as severance arrangement. CEO cash constraints in exercising options is an unexplored explanation for their disappearance.
Author: Qinqin Yang
Publisher:
ISBN: 9781109909142
Category : Chief executive officers
Languages : en
Pages : 177
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Book Description
Equity compensation, mainly including stock options and restricted stock, is an essential part of executive compensation. With respect to the concern on the eroding earnings quality with the increasing use of equity compensation, this study empirically examines the effect of CEO equity compensation on earnings quality. I measure earnings quality as the extent to which current period earnings or accruals are realized as future cash flows. I find that earnings quality is positively associated with CEO equity compensation. That is, CEO equity compensation enhances earnings quality. Moreover, this study further examines whether the positive effect is contingent on the quality of external monitoring, such as auditors and institutional shareholders. My results indicate that the positive role of equity compensation only persists when external monitoring by auditor and (or) institutional investors is weak. When external monitoring is strong, the effect of CEO compensation on earnings quality fades. It implies that the incentive from CEO equity compensation is more like a substitute governance mechanism for external monitoring by auditor or/and institutional investors. Overall, the findings of this study support that equity compensation is efficient in alleviating the agency conflicts between shareholders and managers. The findings also provide some empirical evidence supporting the substitute effect between incentive mechanism and external monitoring.
Author: Tod Perry
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
As monitors of management, independent outside directors play an important oversight and monitoring role in corporate governance. By providing directors with a financial stake in the performance of the firm through incentive-based compensation, firms can align the interests of directors and shareholders. In this paper, I examine whether the structure of director compensation affects CEO turnover, a specific corporate event where directors play a crucial role. I document a substantial increase in the use of incentive-based compensation for directors. I also find that incentive compensation for directors influences the level of monitoring by the board. When directors of independent boards receive incentive compensation, the like lihood of CEO turnover following poor performance increases. I also find that the likelihood of a firm adopting a stock-based incentive plan for directors is positively related to the fraction of independent directors on the board and institutional ownership of the firm, which is consistent with firms adopting option and stock plans for directors to provide financial incentives for directors to monitor management.
Author: Lukas Hengartner
Publisher: Springer Science & Business Media
ISBN: 3835093916
Category : Business & Economics
Languages : en
Pages : 224
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Book Description
Lukas Hengartner shows that both firm complexity and managerial power are associated with higher pay levels. This suggests that top managers are paid for the complexity of their job and that more powerful top managers receive pay in excess of the level that would be optimal for shareholders.
Author: Zhilan Feng
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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Book Description
We analyze director compensation for Real Estate Investment Trusts (REITs) and investigate the relations between director compensation and other measures of the board independence and board monitoring. Using 136 REITs in 2001, we find the REITs that pay higher equity-based compensation to their board members are associated with higher financial performance. Our data indicate that board equity-based compensation is positively related to the existence of an independent nomination committee, however, it has no significant relationship with board size, proportion of outside directors, CEO duality and CEO tenure and ownership.
