Little research has been done to try and connect type of compensation with the use of a specific competitive strategy. We propose that compensation (percentage of base, bonus, options-granted, and stock for the top management team) will moderate the innovation strategy to performance relationship based on risk and time horizon. Analyses of panel data from 1994 to 1998 for 380 firms show that the innovation strategy to performance relationship is moderated by bonus and options-granted compensation. These findings suggest that implementing an innovation strategy and using a high percentage of bonus compensation will lead to greater performance. Alternately, implementing an innovation strategy and using a low percentage of options granted will create the best outcome. Our findings help she...
The Securities and Exchange Commission (``Commission'' or ``SEC'') is adopting amendments to the rule under the Investment Advisers Act of 1940 that permits investment advisers to charge performance based compensation to ``qualified clients.'' The amendments revise the dollar amount thresholds of the rule's tests that are used to determine whether an individual or company is a qualified client. These rule amendments codify revisions that the Commission recently issued by order that adjust the dollar amount thresholds to account for the effects of inflation. In addition, the rule amendments: provide that the Commission will issue an order every five years in the future adjusting the dollar amount thresholds for inflation; exclude the value of a person's primary residence and certain asso...
This Essay offers an executive compensation reform proposal that is especially addressed to firms receiving government financial assistance and thought to pose a systemic risk, although we think that all firms should consider its adoption. Executive compensation reform should lead to policies that are simple, transparent, and focused on creating and sustaining long-term shareholder value. With these criteria in mind, we suggest that executive incentive compensation plans should consist only of restricted stock and restricted stock options, restricted in the sense that the shares cannot be sold or the option cannot be exercised for a period of at least two to four years after the executive's resignation or last day in office. We would permit a minor amount to be paid out to executives cu...
The use of diagnostic and genetic testing prior to and during pregnancy is becoming increasingly common, and with this testing has come a significant increase in the number of wrongful birth and wrongful life lawsuits. In the cases where a wrongful life claim was advanced (usually together with a wrongful birth claim brought by the child's parents), the courts have generally dismissed this aspect of the case, citing public policy reasons. In the cases where wrongful life was recognized as a cause of action, the court estimated a compensation because of "birth with disabilities." The second part of this paper will outline the Health/Wealth Model. From this model, a theory of compensation for lost health is presented in the third section. The aim of the fourth section is to show, from an ...
This paper empirically investigates whether executive compensation has any impact on the IPO pricing. Corporate governance issues including the CEO's compensation are critical to the firm at the time of the IPO as many firms establish a formal separation of ownership and control for the first time. Underwriters, financial analysts, and potential investors are involved in pricing of an IPO. Greater levels of ownership by the firm's executives and insiders decrease the underwriters' risk as the new IPO needs price support to be fully placed in the initial offering. Both of these outcomes may decrease underwriters' profits. Initial public offerings present a unique opportunity to study the value that investors assign to executive compensation, because these companies do not have a history ...
Editor's note: This is the fourth of a five-day series examining Senate Bill 5, which changes collective bargaining rules in Ohio. By MARC KOVAC
The Farm Credit Administration (FCA, us, we, or our) proposes to amend our regulations related to Farm Credit System (System) bank and association disclosures to shareholders and investors. The proposed rule would require reporting of supplemental retirement plans, a discussion of the link between senior officer compensation and performance, and timely and transparent reporting to shareholders of significant events that occur between annual reporting periods. We believe the proposed changes will provide full, transparent and consistent disclosures to shareholders. The proposed rule would identify the minimum responsibilities a compensation committee must perform to ensure it continues to exercise good stewardship, and require that System banks and associations provide for a nonbinding, ...
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